As filed with the Securities and Exchange Commission on December 21, 1995
Registration No. 33-64785
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
UNITED CAROLINA
BANCSHARES CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 6025 56-0954530
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.)
_________________________
127 West Webster Street
Whiteville, North Carolina 28472
(910) 642-5131
(Address, including Zip Code, and telephone number,
including area code, of registrant's principal executive offices)
_________________________
HOWARD V. HUDSON, JR., Esq.
United Carolina Bancshares Corporation
127 West Webster Street
Whiteville, North Carolina 28472
(910) 642-5131
(Name, address, including Zip Code, and telephone number,
including area code, of agent for service)
Copies to:
Alexander M. Donaldson, Esq. Alfred E. Cleveland, Esq.
Ward and Smith, P.A. McCoy, Weaver, Wiggins, Cleveland
Two Hannover Square, Suite 2400 and Raper
Post Office Box 2091 202 Fairway Drive
New Bern, North Carolina 27602 Fayetteville, North Carolina
(919) 836-1800 28305
(910) 483-8104
Approximate date of commencement of the proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.[ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuing basis pursuant to Rule 415 under the Securities
Act of 1933 check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>
UNITED CAROLINA BANCSHARES CORPORATION
Cross-Reference Sheet Pursuant to Item 501 of Regulation S-K
Item of Form S-4
Caption in Prospectus/Proxy Statement
PART I - INFORMATION REQUIRED IN THE PROSPECTUS
A. INFORMATION ABOUT THE TRANSACTION
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1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus . . . . . . . . . . . . Facing Page of Registration
Statement; Cross-Reference Sheet;
Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . Inside Front Cover Page of
Prospectus; Available Information;
Incorporation of Certain Documents
by Reference
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information . . . . . . . . . . . . Summary - Summary of Merger;
Selected Financial Information and
Unaudited Comparative Per Share Data
4. Terms of the Transaction . . . . . Summary - Summary of Merger;
Proposal 1: The Merger - General, -
Conversion of Triad Stock and Triad
Options; Exchange Rate, - Background
of and Reasons for the Merger, -
Fairness Opinion, - Accounting
Treatment, - Certain Income Tax
Consequences; Capital Stock of
Bancshares and Triad; Appendix C
5. Pro Forma Financial Information . Not Applicable
6. Material Contracts with the Company
Being Acquired . . . . . . . . . . Proposal 1: The Merger - Interests
of Certain Persons With Respect to
the Merger
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters . . . . Not Applicable
8. Interests of Named Experts and
Counsel . . . . . . . . . . . . . Tax and Legal Matters
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities . . . . . . . . . Indemnification
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants . . . . . . . . . . . Not Applicable
11. Incorporation of Certain
Information by Reference . . . . . Incorporation of Certain Documents
by Reference
12. Information with Respect to S-2 or
S-3 Registrants . . . . . . . . . Not Applicable
<PAGE>
13. Incorporation of Certain
Information by Reference . . . . . Not Applicable
14. Information with Respect to
Registrants Other Than S-2 or S-3
Registrants . . . . . . . . . . . Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information with Respect to S-3
Companies . . . . . . . . . . . . Not Applicable
16. Information with Respect to S-2 or
S-3 Companies . . . . . . . . . . Incorporation of Certain Documents
by Reference; Triad Bank - General;
Capital Stock of Bancshares and
Triad - Differences in Capital Stock
of Bancshares and Triad; Selected
Financial Information and Unaudited
Comparative Per Share Data; Market
and Dividend Information Regarding
Triad Stock and Bancshares Stock
17. Information with Respect to
Companies Other than S-2 or S-3
Companies . . . . . . . . . . . . Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited Summary - Special Meeting of
Shareholders, - Summary of Merger;
Proposal 1: The Merger - Interests
of Certain Persons With Respect to
the Merger; Rights of Dissenting
Shareholders; Appendix B; United
Carolina Bancshares Corporation and
United Carolina Bank - Beneficial
Ownership of Securities; Triad
Bank - Beneficial Ownership of
Securities
19. Information if Proxies, Consents or Not Applicable
Authorizations are not to be
Solicited or in an Exchange Offer.
<PAGE>
[TRIAD LETTERHEAD]
______________, 1996
To: The Shareholders of Triad Bank
A Special Meeting of Shareholders (the "Special Meeting") of Triad Bank
("Triad") will be held on Tuesday, February 27, 1996, at 10:00 a.m., local time,
at Holiday Inn Four Seasons, 3121 High Point Road at I-40, Greensboro, North
Carolina. At this important meeting, shareholders will be asked to approve
the agreement pursuant to which Triad will be merged (the "Merger") with and
into United Carolina Bank ("UCB") the commercial bank subsidiary of United
Carolina Bancshares Corporation ("Bancshares").
If the Merger is consummated, each outstanding share of Triad common stock
(other than shares held by dissenting shareholders), will be converted into and
exchanged for 0.569444 shares of Bancshares' common stock, $4.00 par value per
share (subject to adjustment as described in the accompanying Prospectus/Proxy
Statement).
Detailed information about the proposed Merger, Triad, UCB and Bancshares
is set forth in the accompanying Prospectus/Proxy Statement. You are urged to
study the Prospectus/Proxy Statement before casting your vote on the Merger. The
Board of Directors of Triad has received a written opinion of The Carson Medlin
Company that the terms of the Merger are fair, from a financial point of view,
to the shareholders of Triad.
Your Board of Directors believes the Merger with UCB is in the best
interests of Triad and its shareholders and has unanimously approved the
Agreement. Accordingly, your Board unanimously recommends that you vote FOR
approval of the Agreement.
Your vote is important, regardless of the number of shares you own.
Approval of the Merger requires the affirmative vote of the holders of two
thirds of the outstanding shares of Triad common stock entitled to vote at the
Special Meeting. Consequently, failure to vote will have the same effect as a
vote against the Merger. Therefore, on behalf of your Board of Directors, I urge
you to complete, date and sign the accompanying appointment of proxy and return
it promptly in the enclosed, postage paid envelope as soon as possible to ensure
that your shares will be voted at the Special Meeting. This will not prevent you
from attending the Special Meeting and voting in person, but will assure that
your vote is counted if you are unable to attend the Special Meeting.
On behalf of the Board of Directors, I urge you to vote FOR approval of the
Agreement.
Sincerely,
James E. Mims
Chairman and Chief Executive Officer
<PAGE>
Triad Bank
113 North Greene Street
Greensboro, North Carolina 27401
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that a Special Meeting of Shareholders (the
"Special Meeting") of Triad Bank ("Triad") will be held at 10:00 a.m. on
Tuesday, February 27, 1996, at Holiday Inn Four Seasons, 3121 High Point Road
at I-40, Greensboro, North Carolina.
The purposes of the meeting are:
1. Proposal to Approve the Merger. To consider and vote on a
proposal to approve the Agreement and Plan of Reorganization and
Merger, dated as of October 19, 1995 (the "Agreement"), among
Triad, United Carolina Bank ("UCB") and United Carolina Bancshares
Corporation ("Bancshares") (a copy of which is attached as
Appendix A to the Prospectus/Proxy Statement which accompanies
this Notice), and to approve the transactions described therein,
including, without limitation, the merger of Triad into UCB (the
"Merger") with the result that the outstanding shares of Triad's
common stock, $2.50 par value per share ("Triad Stock"), will be
converted into shares of Bancshares' common stock, $4.00 par value
per share, all as more fully described in the accompanying
Prospectus/Proxy Statement;
2. Other Business. To transact such other business as may properly
come before the Special Meeting or any adjournment thereof.
Management of Triad is not aware of any other matters which may
properly come before the Special Meeting.
UNDER NORTH CAROLINA LAW, EACH HOLDER OF TRIAD STOCK HAS THE RIGHT
TO DISSENT FROM THE MERGER AND TO DEMAND PAYMENT OF THE FAIR VALUE OF
HIS OR HER SHARES OF TRIAD STOCK IN THE EVENT THE MERGER IS APPROVED AND
CONSUMMATED. A SHAREHOLDER'S RIGHT TO DISSENT IS CONTINGENT UPON STRICT
COMPLIANCE WITH THE REQUIREMENTS OF ARTICLE 13 OF THE NORTH CAROLINA
BUSINESS CORPORATION ACT. THE FULL TEXT OF ARTICLE 13 IS ATTACHED AS
APPENDIX B TO THE PROSPECTUS/PROXY STATEMENT WHICH ACCOMPANIES THIS
NOTICE AND IS INCORPORATED HEREIN BY REFERENCE.
EACH SHAREHOLDER IS INVITED TO ATTEND THE SPECIAL MEETING IN
PERSON. HOWEVER, TO INSURE THAT A QUORUM IS PRESENT AT THE SPECIAL
MEETING, EACH SHAREHOLDER IS URGED TO COMPLETE, DATE, SIGN AND RETURN
PROMPTLY THE ENCLOSED APPOINTMENT OF PROXY IN THE ENCLOSED PREPAID
ENVELOPE. SIGNING AND RETURNING AN APPOINTMENT OF PROXY WILL NOT AFFECT
A SHAREHOLDER'S RIGHT TO ATTEND THE SPECIAL MEETING AND VOTE IN PERSON.
By Order of the Board of Directors
Kenneth M. Greene
Secretary
January ___, 1996
TRIAD'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE TO APPROVE THE AGREEMENT.
<PAGE>
PROSPECTUS
UNITED CAROLINA
BANCSHARES CORPORATION
1,200,000 Shares
Common Stock
Par Value $4.00
_________________________
PROXY STATEMENT
For Special Meeting of Shareholders of
Triad Bank
to be Held on February 27, 1996
_________________________
This Prospectus relates to shares of the common stock, $4.00 par
value per share ("Bancshares Stock"), of United Carolina Bancshares
Corporation ("Bancshares") that will be issued in connection with the
proposed merger (the "Merger") of Triad Bank ("Triad") into United
Carolina Bank ("UCB"). Bancshares is a North Carolina corporation which
is registered with the Board of Governors of the Federal Reserve System
(the "Federal Reserve") as a bank holding company and which is the
parent company of UCB. As described in the Agreement and Plan of
Reorganization and Merger, dated as of October 19, 1995 (the
"Agreement"), among Triad, Bancshares and UCB, it is proposed that
Triad be merged into UCB and, upon consummation of the Merger, that the
outstanding shares of Triad's common stock, $2.50 par value per share
("Triad Stock"), be converted and exchanged for shares of Bancshares
Stock. (See "PROPOSAL 1: THE MERGER.")
Each holder of Triad Stock is entitled to exercise his or her
statutory dissenter's rights in accordance with North Carolina law. (See
"RIGHTS OF DISSENTING SHAREHOLDERS.") In lieu of issuing fractional
shares of Bancshares Stock, cash will be distributed to each Triad
shareholder otherwise entitled to receive a fractional share in an
amount equal to that fraction multiplied by the "market value" of one
whole share of Bancshares Stock. (See "PROPOSAL 1: THE MERGER -
Treatment of Fractional Shares.")
This Prospectus also serves as Triad's Proxy Statement in
connection with the solicitation of appointments of proxy by the Triad
Board of Directors to be used at a Special Meeting of Triad's
shareholders (the "Special Meeting"), including any adjournments
thereof, to be held on February 27, 1996, for the purposes described
herein. (See "SUMMARY - Special Meeting of Shareholders.")
The Prospectus/Proxy Statement and the accompanying form of
appointment of proxy are first being mailed to shareholders of Triad on
or about January ___, 1996.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus/Proxy Statement is January ___, 1996.
<PAGE>
No person is authorized to give any information or make any
representation other than those contained in this Prospectus/Proxy
Statement, and, if given or made, such information or representation
should not be relied upon as having been authorized by Bancshares, UCB
or Triad. This Prospectus/Proxy Statement does not constitute an offer
to sell, or a solicitation of an offer to purchase the securities
offered by this Prospectus/Proxy Statement in any jurisdiction in which
such offer is not authorized or to or from any person to whom it is
unlawful to make such offer or solicitation. The information contained
or incorporated by reference in this Prospectus/Proxy Statement
regarding Bancshares and its affiliates has been furnished by
Bancshares, and the information contained herein regarding Triad has
been furnished by Triad. Neither the delivery of this Prospectus/Proxy
Statement nor any distribution of the securities being offered hereunder
shall, under any circumstances, create any implication that there has
been no change in the affairs of Bancshares, UCB or Triad since the date
of this Prospectus/Proxy Statement or that the information contained
herein or in the documents incorporated by reference is correct as of
any time subsequent to the date hereof.
THE SHARES OF BANCSHARES STOCK OFFERED HEREBY ARE NOT DEPOSITS OF
ANY BANK OR FINANCIAL INSTITUTION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
______________________________
TABLE OF CONTENTS
</TABLE>
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AVAILABLE INFORMATION.......................................3 PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION....31
INCORPORATION OF CERTAIN MARKET AND DIVIDEND INFORMATION ......................38
DOCUMENTS BY REFERENCE....................................3 CAPITALIZATION........................................39
SUMMARY.....................................................5 UNITED CAROLINA BANCSHARES
Special Meeting of Shareholders...........................5 CORPORATION AND UNITED
Summary of the Merger.....................................6 CAROLINA BANK.......................................39
SELECTED FINANCIAL INFORMATION AND General.............................................39
UNAUDITED COMPARATIVE PER SHARE DATA.....................10 Recent Events.......................................40
PROPOSAL 1: THE MERGER....................................13 Beneficial Ownership of Securities..................40
General..................................................13 TRIAD BANK............................................41
Conversion of Triad Stock and General.............................................41
Triad Options; Exchange Rate...........................13 Beneficial Ownership of Securities..................41
Surrender and Exchange of Certificates...................14 REGULATION AND SUPERVISION............................43
Treatment of Fractional Shares...........................14 CAPITAL STOCK OF BANCSHARES
Background of and Reasons for the Merger.................15 AND TRIAD...........................................50
Recommendation...........................................16 Capital Stock of Bancshares.........................50
Fairness Opinion.........................................16 Differences in Capital Stock of
Required Shareholder Approval............................20 Bancshares and Triad..............................50
Required Regulatory Approvals............................21 INDEMNIFICATION.......................................52
Conduct of Business Pending the Merger...................21 TAX AND LEGAL MATTERS.................................53
Dividends................................................21 EXPERTS...............................................53
Prohibition on Solicitation..............................21 OTHER MATTERS.........................................54
Accounting Treatment.....................................21 PROPOSALS OF SHAREHOLDERS.............................54
Certain Income Tax Consequences..........................22 APPENDIX A - Agreement and Plan of
Conditions to the Merger.................................23 Reorganization and Merger..........................A-1
Waiver; Amendment of Agreement...........................23 APPENDIX B - Article 13 of the
Termination of Agreement.................................24 North Carolina Business
Closing Date and Effective Time..........................24 Corporation Act Relating to the
Interests of Certain Persons With Respect Rights of Dissenting Shareholders..................B-1
to the Merger..........................................25 APPENDIX C - Opinion of
Restrictions on Resale of Bancshares Stock The Carson Medlin Company..........................C-1
Received by Certain Persons............................27
Expenses.................................................28
Termination Fee..........................................28
RIGHTS OF DISSENTING SHAREHOLDERS..........................29
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2
<PAGE>
AVAILABLE INFORMATION
Bancshares is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") and, in
accordance therewith, files proxy statements, reports and other
information with the Securities and Exchange Commission (the
"Commission"). Proxy statements, reports and other information filed by
Bancshares can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, DC 20549, and at the Commission's
Regional Offices located in Chicago (Citicorp Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661-2511) and in New York (7
World Trade Center, Suite 1300, New York, New York 10048). Copies of
such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, DC 20549, at prescribed
rates.
Bancshares has filed with the Commission a Registration Statement
on Form S-4 under the Securities Act of 1933, as amended (the "1933
Act"), with respect to the Bancshares Stock offered hereby. As
permitted by the rules and regulations of the Commission, this
Prospectus/Proxy Statement does not contain all the information set
forth in the Registration Statement and the exhibits and schedules
thereto, all of which may be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, DC 20549, upon
payment of the prescribed fees.
Triad also is subject to the informational requirements of the
1934 Act and, in accordance therewith, files reports, proxy statements
and other information with the Federal Deposit Insurance Corporation
("FDIC"). Such reports, proxy statements and other information filed by
Triad may be obtained from the FDIC at prescribed rates by addressing
written requests for such copies to the FDIC, Registration and
Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429. In
addition, such documents may be inspected and copied at the public
reference facilities of the FDIC at 1776 F Street, N.W., Room F- 643,
Washington, D.C. 20429.
AS FURTHER DESCRIBED BELOW, THIS PROSPECTUS/PROXY STATEMENT
INCORPORATES BY REFERENCE DOCUMENTS RELATING TO BANCSHARES OR TRIAD
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF
DOCUMENTS RELATED TO BANCSHARES OR TRIAD (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
DOCUMENTS), WILL BE PROVIDED WITHOUT CHARGE TO ANY BENEFICIAL OWNER OF
SHARES OF TRIAD STOCK UPON A REQUEST, FOR BANCSHARES DOCUMENTS, TO
HOWARD V. HUDSON, JR., SECRETARY, UNITED CAROLINA BANCSHARES
CORPORATION, P. O. BOX 632, WHITEVILLE, N. C. 28472, TELEPHONE (910)
642-5131 AND, FOR TRIAD DOCUMENTS, TO WANDA S. CLARK, ASSISTANT
SECRETARY, TRIAD BANK, POST OFFICE BOX 22006, GREENSBORO, N.C. 27420,
TELEPHONE (910) 271-4700. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS BEFORE THE SPECIAL MEETING, ANY SUCH REQUEST SHOULD BE MADE BY
MARCH __, 1996.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Bancshares with the
Commission (SEC File No. 0-5583) are incorporated by reference into this
Prospectus/Proxy Statement: (i) Bancshares' Annual Report on Form 10-K
for the fiscal year ended December 31, 1994; (ii) Bancshares' Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1995, June 30,
1995, and September 30, 1995; (iii) Bancshares' Current Reports on Form
8-K dated May 22, 1995 and October 19, 1995; and (iv) the description of
Bancshares Stock contained in its Registration Statement on Form 10, as
amended by Bancshares' subsequent reports filed under the 1934 Act. The
following documents previously filed by Triad with the FDIC (all of
which are exhibits to the Registration Statement) are incorporated by
reference into this Prospectus/Proxy Statement: (i) Triad's Annual
Report on Form F-2 for the fiscal year ended December 31, 1994; (ii)
Triad's Quarterly Reports on Form F-4 for the quarters ended March 31,
1995, June 30, 1995 and September 30, 1995; and (iii) Triad's Current
Report on Form F-3 dated October 24, 1995.
In addition, all other documents filed by Bancshares pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act prior to final
adjournment of the Special Meeting shall be deemed to be incorporated by
reference into this Prospectus/Proxy Statement. Any statements
contained in a document incorporated or deemed to be incorporated by
reference herein will be deemed to be modified or superseded for
purposes of this Prospectus/Proxy Statement to the extent that a
statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus/Proxy Statement.
3
<PAGE>
TRIAD'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1994 AND QUARTERLY REPORT ON FORM F-4 FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1995 ACCOMPANY THIS PROSPECTUS/PROXY STATEMENT.
4
<PAGE>
SUMMARY
Special Meeting of Triad Shareholders
General. This Prospectus/Proxy Statement is being furnished in
connection with the solicitation by Triad's Board of Directors of
appointments of proxy for use at the Special Meeting, and at any
adjournments thereof.
Date, Place and Time. The Special Meeting will be held on February 27,
1996, at 10:00 a.m. local time, at Holiday Inn Four Seasons, 3121 High Point
Road at I-40, Greensboro, North Carolina.
Purposes of Special Meeting. The purposes of the Special Meeting
are (i) to consider and vote on a proposal to approve the Agreement, a
copy of which is attached as Appendix A to this Prospectus/Proxy
Statement and is incorporated herein by reference, and (ii) to transact
such other business as may properly come before the Special Meeting.
(See "PROPOSAL 1: THE MERGER.")
Solicitation and Voting of Proxies. The persons named to
represent shareholders as proxies at the Special Meeting are James E.
Mims and Kenneth M. Greene (the "Proxies"). Shares represented by each
appointment of proxy which is properly executed and returned, and not
revoked, will be voted by the Proxies in accordance with the directions
contained therein. If no directions are given, such shares will be
voted by the Proxies "FOR" Proposal 1. On such other matters that may
properly come before the Special Meeting, the Proxies will be authorized
to vote in accordance with their best judgment.
Record Date. The close of business on January 2, 1996 has
been fixed as the record date (the "Record Date") for the determination
of shareholders entitled to notice of and to vote at the Special
Meeting. Only those shareholders of record on the Record Date will be
eligible to vote on the matters described herein.
Voting Securities. The voting securities of Triad are the shares
of Triad Stock, of which ______ shares were issued and outstanding on
the Record Date. As of September 30, 1995, the directors and executive
officers of Triad and their affiliates beneficially owned and were
entitled to vote approximately 20% of the outstanding shares of Triad
Stock. The directors and executive officers of Triad are expected to
vote their shares in favor of the Agreement. Information as to the
nature of such persons' beneficial ownership is included in the section
of this Prospectus/Proxy Statement entitled "Triad Bank - Beneficial
Ownership of Securities."
Votes Required for Approval. At the Special Meeting, each
shareholder will be entitled to cast one vote for each share of Triad
Stock held of record on the Record Date on each matter submitted for
voting. The affirmative vote of the holders of two thirds of the
outstanding shares of Triad Stock is required to approve the Agreement.
Because the affirmative vote of two-thirds of all outstanding shares of
Triad Stock is required to approve the Agreement, abstentions, broker
nonvotes and shares otherwise not voted at the Special Meeting will have
the same effect as votes against the Agreement.
Revocation of Appointment of Proxy. Any shareholder who executes
an appointment of proxy has the right to revoke it at any time before it
is exercised by filing with the Secretary of Triad either an instrument
revoking it or a duly executed appointment of proxy bearing a later
date, or by attending the Special Meeting and announcing his intention
to vote in person.
Proxy Solicitation Expenses. Except under certain circumstances
involving a wrongful termination or breach of the Agreement, the cost of
soliciting proxies will be deemed to be incurred and shall be paid 50%
by Triad and 50% by Bancshares. In addition to the use of the mails,
appointments of proxy may be solicited personally or by telephone by
Triad's officers, directors and employees, none of whom will be
compensated separately for any such solicitation activities.
5
<PAGE>
Summary of the Merger
The following is a brief summary of information about the
Agreement (a copy of which is attached as Appendix A to this
Prospectus/Proxy Statement) and the transactions described therein and
is not intended to be a complete statement of all material facts
regarding the Merger. This summary is qualified in its entirety by
reference to the more detailed information contained elsewhere herein
(see "PROPOSAL 1: THE MERGER"), the accompanying Appendices, and the
other documents referred to or incorporated herein by reference.
Parties to the Merger. Bancshares is a North Carolina business
corporation which is registered with the Federal Reserve as a bank
holding company and is the parent company of UCB. UCB is a North
Carolina commercial bank. Bancshares' and UCB's principal offices are
located at 127 West Webster Street (Post Office Box 632), Whiteville,
North Carolina 28472, and their telephone number is (910) 642-5131. (See
"UNITED CAROLINA BANCSHARES CORPORATION AND UNITED CAROLINA BANK.") At
September 30, 1995, Bancshares' consolidated financial statements
reflected total assets of $3.8 billion, total deposits of $3.4 billion
and total stockholders' equity of $292.3 million.
Triad is a North Carolina commercial bank. Its principal office
is located at 113 North Greene Street (Post Office Box 22006),
Greensboro, North Carolina 27401, and its telephone number is (910)
271-4700. (See "TRIAD BANK.") At September 30, 1995, Triad's financial
statements reflected total assets of $199.2 million, total deposits of
$181.3 million, and total stockholders' equity of $15.0 million.
Effect of Merger. The Merger is provided for in the Agreement
which has been entered into among Bancshares, UCB and Triad. At the
time the Merger becomes effective (the "Effective Time"), Triad will be
merged into and its corporate existence will be combined with that of
UCB, Triad will cease to exist as a separate corporation, and UCB will
be the surviving corporation and continue to conduct business under its
charter and with its then current management. (See "PROPOSAL 1: THE
MERGER - General.")
Conversion of Triad Stock. At the Effective Time, each
outstanding share of Triad Stock (other than shares as to which Triad's
shareholders properly exercise their "Dissenter's Rights" under North
Carolina law) will be converted into, and thereafter may be exchanged
for, 0.569444 of a share (the "Exchange Rate") of Bancshares Stock.
However, if the average closing price of Bancshares Stock on the Nasdaq
National Market for the 30 consecutive trading days immediately
preceding the Special Meeting (the "30-Day Average") is greater than
$40.39 per share, then the Exchange Rate will be adjusted to equal the
ratio (rounded to six decimal places) produced by dividing $23.00 by the
30-Day Average, and if the 30-Day Average is less than $31.61 per share,
then the Exchange Rate will be adjusted to equal the ratio (rounded to
six decimal places) produced by dividing $18.00 by the 30-Day Average.
However, Bancshares may terminate the Agreement (unless Bancshares has
agreed to be acquired) if the 30-Day Average exceeds $43.20 and Triad
may terminate the Agreement if the 30-Day Average is less than $28.80.
Given these minimum and maximum prices, the Exchange Rate could
fluctuate between a high of .625000 and a low of .532407. As of
January __, 1996, the 30-Day Average was $________ which would have
resulted in an Exchange Rate equal to __________. (See "PROPOSAL 1: THE
MERGER - Conversion of Triad Stock and Triad Options; Exchange Rate" and
"-- Termination of Agreement.")
Treatment of Fractional Shares. In lieu of issuing fractional
shares of Bancshares Stock, cash will be distributed to each Triad
shareholder otherwise entitled to receive a fractional share in an
amount equal to that fraction multiplied by the "market value" (as
defined in the Agreement) of one whole share of Bancshares Stock. (See
"PROPOSAL 1: THE MERGER - Treatment of Fractional Shares.")
Recommendations and Reasons. TRIAD'S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT TRIAD'S SHAREHOLDERS VOTE TO APPROVE THE
AGREEMENT. Triad's Board of Directors has adopted the Agreement and
believes the Merger is in the best interests of Triad and its
shareholders and unanimously recommends that Triad's shareholders vote
FOR approval of the Agreement. The Board of Directors considered a
variety of factors in approving the Agreement, including without
limitation (i) the amount and nature of the consideration to be received
by Triad's shareholders, (ii) the greater liquidity and the potential
for increases in the value of Bancshares Stock as compared to Triad
Stock, (iii) Bancshares' cash dividend and earnings record, (iv) the
6
<PAGE>
treatment of Triad's officers and employees, (v) the more efficient and
profitable operation of Triad through economies of scale, and (vi) the
ability to offer expanded services to Triad's customers. (See "PROPOSAL
1: THE MERGER -- Recommendation," and "--Background of and Reasons for
the Merger.")
Fairness Opinion. Triad's Board of Directors retained The Carson
Medlin Company ("Carson Medlin") to provide it with an opinion of the
fairness of the Merger to Triad's shareholders from a financial point of
view. After a review of a variety of relevant factors, Carson Medlin
has given the Board of Directors a written opinion dated
________________, 1996 (the "Fairness Opinion", a copy of which is
attached as Appendix C to this Prospectus/Proxy Statement) to the effect
that the consideration to be received by Triad's shareholders in
connection with the Merger as provided in the Agreement is fair from a
financial point of view. For its services, Triad has paid Carson Medlin
a fee of $15,000 for services rendered to date and has agreed to pay
Carson Medlin an additional fee of $20,000 if the Merger is consummated.
Triad also has agreed to reimburse Carson Medlin for its out-of-pocket
expenses incurred in connection with activities contemplated by its
engagement by Triad. Additionally, Triad has agreed to indemnify Carson
Medlin against certain liabilities that may arise in connection with its
engagement. Triad's and Bancshares' respective obligations to
consummate the Merger are conditioned on Triad's receipt from Carson
Medlin immediately prior to consummation of the Merger of a letter
stating that it remains Carson Medlin's opinion that the terms of the
Merger are fair to Triad's shareholders from a financial point of view.
(See "PROPOSAL 1: THE MERGER -- Fairness Opinion.")
Required Approval of Triad's Shareholders. Under North Carolina
law, the Agreement must be approved by the affirmative vote of the
holders of two-thirds of the total outstanding shares of Triad Stock, in
person or by proxy, at the Special Meeting. The Agreement must be
approved by such vote in order to consummate the Merger. (See "PROPOSAL
1: THE MERGER.")
Required Regulatory Approvals. The Merger is subject to approval
by the North Carolina Commissioner of Banks (the "Commissioner"), the
North Carolina State Banking Commission (the "Banking Commission"), and
the FDIC. Applications for all such required approvals have been filed
and are pending. While no assurances are or can be given, Bancshares
and Triad believe that all such required regulatory approvals will be
obtained. (See "PROPOSAL 1: THE MERGER -- Required Regulatory
Approvals.")
Conditions to Merger. In addition to required regulatory and
shareholder approvals, consummation of the Merger is conditioned upon
the fulfillment of certain other conditions described in the Agreement,
including without limitation, (i) receipt of an opinion to the effect
that, among other things, for federal income tax purposes the Merger
will constitute a "reorganization" as defined in (section mark) 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended (the "Code"); (ii) receipt of
the Fairness Opinion and receipt of written confirmation of the Fairness
Opinion immediately prior to the Effective Time; (iii) receipt by
Bancshares of an opinion of KPMG Peat Marwick LLP to the effect that the
Merger qualifies for pooling-of-interests accounting treatment, and (iv)
certain other conditions customary in transaction of this nature. (See
"PROPOSAL 1: THE MERGER -- Conditions to Merger.")
Waiver and Amendment. Prior to the Effective Time, any provision
of the Agreement (other than provisions relating to regulatory approvals
and other approvals required by law) may be waived by the party entitled
to the benefits of such provisions. Additionally, the Agreement may be
amended, modified or supplemented by Bancshares, UCB and Triad at any
time prior to the Effective Time, and whether before or after approval
by Triad's shareholders, by an agreement in writing approved by a
majority of the members of their respective Boards of Directors.
However, except as otherwise provided in the Agreement, following
approval of the Agreement by Triad's shareholders, no such amendment may
change the Exchange Rate without shareholder approval of such change.
(See "PROPOSAL 1: THE MERGER -- Waiver, Amendment of Agreement.")
Termination of the Agreement. The Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time, whether
before or after approval by Triad's shareholders, by the mutual
agreement of Bancshares, UCB and Triad, and may be terminated by either
Bancshares or Triad under certain circumstances described in the
Agreement. (See PROPOSAL 1: THE MERGER -- Termination of Agreement.")
Effective Time. Assuming the receipt of all required approvals,
it currently is expected that the Merger will become effective during
the first half of 1996. (See "PROPOSAL 1: THE MERGER -- Closing Date
and Effective
7
<PAGE>
Time.") The Board of Directors of either Triad or UCB may
terminate the Agreement if the Effective Time shall not have occurred by
July 31, 1996. (See "PROPOSAL 1: THE MERGER -- Termination of
Agreement.")
Directors and Officers. Following the Effective Time, Bancshares'
and UCB's then current directors and executive officers will continue to
serve for the remainder of their respective terms of office as the
directors and executive officers of Bancshares and UCB. Following the
Effective Time, Bancshares' Board of Directors will appoint one member
of Triad's Board of Directors (who will be selected by mutual agreement
of Bancshares and Triad) to serve as a director of UCB. See "PROPOSAL
1: THE MERGER -- Interests of Certain Persons with Respect to the
Merger.")
Interests of Certain Persons. In order to assure itself of their
assistance and continued services during the transition period following
the Effective Time, (i) at the Effective Time UCB will enter into an
employment agreement with each of James E. Mims (who serves as a
director of Triad and its Chairman and Chief Executive Officer) and with
Carl I. Carlson, III (who serves as a director of Triad and its
President), and (ii) Triad's directors and advisory board members (other
than the director appointed to UCB's Board of Directors and
directors who also are employees of Triad or who do not desire to
serve as such) will be appointed to serve as local advisory board
members of UCB for one of UCB's city offices in Triad's former
geographic market and will receive fees for a period of one year which
approximate the fee schedules for services as directors and advisory
board members, respectively, of Triad in 1995. Also at the Effective
Time (i) all outstanding options to purchase Triad Stock will be
converted into options to purchase Bancshares Stock, (ii) title to the
automobiles owned by Triad and used by Mr. Mims and Mr. Carlson shall be
transferred to Mr. Mims and Mr. Carlson, respectively, (iii) UCB, for a
period of six months after the Effective Time, will assume Triad's
obligations under two life insurance policies on Mr. Carlson, and (iv)
UCB will assume Triad's obligations under a split dollar life insurance
policy for James E. Mims currently maintained by Triad. (See "PROPOSAL
1: THE MERGER -- Interests of Certain Persons With Respect to the
Merger.")
Accounting Treatment. It is a condition to the Agreement that the
Merger be accounted for as a pooling-of-interests for accounting and
financial reporting purposes. Generally, among other requirements, if
the number of fractional shares, shares repurchased by Triad or by
Bancshares, shares of Triad shareholders who exercise their dissenter's
rights, and the like acquired for cash, together would represent more
than 10% of the shares to be issued by Bancshares in connection with
the Merger, the Merger will not qualify for the pooling-of-interests
method of accounting. If the Merger will not qualify for the
pooling-of-interests method of accounting for any reason, Bancshares
will be entitled to terminate the Agreement and abandon the Merger. (See
"PROPOSAL 1: THE MERGER -- Accounting Treatment,""--Termination of
Agreement," and "RIGHTS OF DISSENTING SHAREHOLDERS.")
Income Tax Consequences. Triad and Bancshares have received an
opinion (the "Tax Opinion") from KPMG Peat Marwick LLP, tax advisors to
Triad and Bancshares, to the effect that the Merger will constitute a
tax-free reorganization under Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Code, with no gain or loss being recognized by Triad's shareholders
upon the conversion and exchange of shares of Triad Stock into shares of
Bancshares Stock (except with respect to cash received in lieu of
fractional shares of Bancshares Stock or in redemption of shares of
Triad Stock as to which Dissenter's Rights are exercised.) Because of
the complexity of federal income tax laws and because tax consequences
may vary depending on a shareholder's individual circumstances or tax
status, it is recommended that each of Triad's shareholders consult his
or her own tax advisor concerning the federal (and applicable state,
local or other) tax consequences of the Merger. (See "PROPOSAL 1: THE
MERGER -- Certain Income Tax Consequences.")
Rights of Dissenting Shareholders. Subject to certain conditions,
each Triad shareholder has the right under North Carolina law to assert
dissenter's rights and to receive the "fair value" of his or her shares
of Triad Stock in cash ("Dissenter's Rights"). Any shareholder who
desires to assert Dissenter's Rights must, among other things, (i) give
to Triad, before the vote on the Agreement is taken, timely written
notice of his or her intent to demand payment for his or her shares if
the Merger is consummated, (ii) not vote his or her shares in favor of
the Agreement, (iii) demand payment and deposit his or her share
certificates by the date set forth in and in accordance with the terms
and conditions of a "dissenter's notice" sent to such shareholder by
Triad, and (iv) otherwise satisfy the requirements specified in Appendix
B to the Prospectus/Proxy Statement. Assuming shareholder approval and
consummation of the Merger, a shareholder who properly exercises
Dissenter's Rights will be offered the amount Triad estimates to be the
fair value of his or her shares of Triad Stock, plus accrued interest to
the date of payment, and will be paid such amount in cash provided the
shareholder agrees in writing to accept such amount in full satisfaction
of his or her demand. In order to
8
<PAGE>
exercise Dissenter's Rights, a shareholder MUST follow carefully ALL steps
prescribed in Appendix B. (See "RIGHTS OF DISSENTING SHAREHOLDERS" and
Appendix B.) A shareholder who returns a signed appointment of proxy but
fails to provide instructions as to the manner in which such shares are to be
voted will be deemed to have voted in favor of the Agreement and will not be
entitled to assert Dissenter's Rights.
Differences in Capital Stock of Bancshares and Triad. In connection with
the Merger, Triad's shareholders (other than shareholders who exercise
Dissenter's Rights) will become shareholders of Bancshares. There are certain
differences between the rights of shareholders of Bancshares as opposed to
shareholders of Triad. Shareholders should consider carefully the difference in
Bancshares Stock and Triad Stock under the governing instruments of those
corporations and North Carolina law. (See "CAPITAL STOCK OF BANCSHARES AND
TRIAD -- Differences in Capital Stock of Bancshares and Triad.")
Resales of Bancshares Stock Received in Merger. The shares of Bancshares
Stock into which Triad Stock will be converted in the Merger will be freely
transferable by the holders thereof except in the case of shares held by persons
who may be deemed to be "Affiliates" of Triad or Bancshares under applicable
federal securities laws. Generally, Triad's Affiliates include its directors,
executive officers, principal shareholders and other persons who may be deemed
to "control" Triad. (See "PROPOSAL 1: THE MERGER -- Restrictions on Resale of
Bancshares Stock Received by Certain Persons.")
9
<PAGE>
SELECTED FINANCIAL INFORMATION AND UNAUDITED COMPARATIVE PER SHARE DATA
United Carolina Bancshares Corporation
The following table sets forth certain selected historical consolidated
financial information for Bancshares at the date and for the periods indicated.
This selected financial information has been derived from and should be read in
conjunction with Bancshares' audited consolidated financial statements and
interim unaudited financial statements, including the related notes thereto,
which are incorporated by reference in this Prospectus/Proxy Statement. (See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.") Management of Bancshares
believes such unaudited consolidated financial statements as of and for the nine
months ended September 30, 1995 and 1994 include all adjustments (which consist
only of normal recurring accruals) necessary for a fair presentation of such
results for such interim periods. Results for the nine months ended
September 30, 1995, are not necessarily indicative of results that may be
expected for any other interim period or for the full year.
<TABLE>
<CAPTION>
As of or for the
nine months As of or for the
ended September 30, years ended December 31,
(unaudited)
1995 1994 1994 1993 1992 1991 1990
(Dollars in thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of operations:
Interest income . . . . . . . . . . $ 210,509 $ 169,849 $ 231,856 $ 206,452 $ 211,795 $ 234,722 $ 242,349
Interest expense . . . . . . . . . 93,355 62,525 87,021 78,701 91,805 122,807 137,489
Net interest income . . . . . . . 117,154 107,324 144,835 127,751 119,990 111,915 104,860
Provision for credit losses . . . . 4,400 2,771 3,371 4,993 11,920 14,616 17,540
Net interest income after
provision for credit losses . . 112,754 104,553 141,464 122,758 108,070 97,299 87,320
Noninterest income . . . . . . . . 33,355 32,445 43,405 41,671 38,982 35,999 32,099
Noninterest expenses, excluding
restructuring charges . . . . . . 93,894 93,318 125,699 115,970 105,655 100,204 91,829
Restructuring charges . . . . . . . 1,300 11,906
Income before income taxes . . . . 52,215 42,380 47,264 48,459 41,397 33,094 27,590
Income tax provision . . . . . . 19,027 15,316 17,198 15,842 12,968 9,713 7,352
Income before cumulative
effects of changes in 33,188 27,064 30,066 32,617 28,429 23,381 20,238
accounting methods . . . . . . .
Cumulative effects of changes
in accounting methods . . . . . . (316) (316) 855
Net income . . . . . . . . . . . . $ 33,188 $ 26,748 $ 29,750 $ 33,472 28,429 $ 23,381 $ 20,238
Per share data:
Income before cumulative
effects of changes in $ 2.25 $ 1.85 $ 2.05 $ 2.23 1.96 $ 1.61 $ 1.39
accounting methods . . . . . . .
Net income . . . . . . . . . . . . $ 2.25 $ 1.83 $ 2.03 $ 2.29 1.96 $ 1.61 $ 1.39
Cash dividends declared . . . . . . $ .72 $ .62 $ .84 $ .76 .66 $ .61 $ .60
Book value at end of period . . . . $ 19.79 $ 18.11 $ 17.92 $ 17.22 15.69 $ 14.37 $ 13.09
Balance sheet data at period-end:
Total assets . . . . . . . . . . . $3,766,643 $3,239,041 $3,331,638 $3,132,849 $2,874,077 $2,679,227 $2,649,379
Total earning assets . . . . . . . 3,513,521 3,001,018 3,085,570 2,873,901 2,644,736 2,451,087 2,297,705
Loans, net of unearned income . . . 2,635,535 2,355,912 2,418,158 2,226,425 1,897,906 1,818,847 1,713,244
Total deposits . . . . . . . . . . 3,398,206 2,885,753 2,940,599 2,811,656 2,540,843 2,424,742 2,412,647
Stockholders' equity . . . . . . . $ 292,315 $ 266,063 $ 263,489 $ 251,915 $ 228,437 $ 208,942 $ 190,256
Average balance sheet data:
Total assets . . . . . . . . . . . $3,545,516 $3,160,194 $3,190,756 $2,932,951 $2,780,564 $2,657,284 $2,531,947
Total earning assets . . . . . . . 3,314,108 2,942,498 2,973,425 2,721,807 2,580,599 2,415,833 2,290,184
Loans, net of unearned income . . . 2,550,155 2,300,535 2,319,309 2,019,087 1,864,292 1,760,035 1,692,848
Total deposits . . . . . . . . . . 3,179,590 2,809,092 2,836,243 2,606,340 2,476,963 2,406,175 2,291,256
Stockholders' equity . . . . . . . $ 275,989 $ 257,212 $ 259,584 $ 239,488 $ 217,779 $ 197,891 $ 184,647
Performance ratios:
Income before cumulative
effects of changes in
accounting methods as a
percent of:
Average stockholders'
equity . . . . . . . . . . . 16.08%(1) 14.07%(1) 11.58% 13.62% 13.05% 11.82% 10.96%
Average total assets . . . . . 1.25%(1) 1.15%(1) .94% 1.11% 1.02% .88% .80%
____________________________________________
(1) Annualized.
</TABLE>
10
<PAGE>
Triad Bank
The following table sets forth certain selected historical
financial information for Triad at the dates and for the periods
indicated. This selected financial information has been derived from
and should be read in conjunction with Triad's audited financial
statements and interim unaudited financial statements, including the
related notes thereto, which are incorporated by reference in this
Prospectus/Proxy Statement. (See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE.") Management of Triad believes that such unaudited financial
statements as of and for the nine months ended September 30, 1995 and
1994 include all adjustments (which consist only of normal recurring
accruals) necessary for a fair presentation of such results for such
interim periods. Results for the nine months ended September 30, 1995,
are not necessarily indicative of results that may be expected for any
other interim period or for the full year.
<TABLE>
<CAPTION>
As of or for the
nine months As of or for the
ended September 30, years ended December 31,
(unaudited)
1995 1994 1994 1993 1992 1991 1990
(Dollars in thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of operations:
Interest income . . . . . . . . . . $ 10,619 $ 8,547 $ 11,840 $ 6,401 $ 6,690 $ 8,781 $ 9,337
Interest expense . . . . . . . . . 4,173 2,952 4,094 2,078 2,583 4,237 5,045
Net interest income . . . . . . . 6,446 5,595 7,746 4,323 4,107 4,544 4,292
Provision for loan losses . . . . . 125 150 150 225 526 1,960 340
Net interest income after
provision for loan losses . . . 6,321 5,445 7,596 4,098 3,581 2,584 3,952
Other income . . . . . . . . . . . 1,364 1,371 1,795 1,092 1,129 1,036 914
Gain (loss) on sale of securities . --- 2 (27) --- 14 123 10
Other expenses . . . . . . . . . . 6,129 5,870 7,851 4,614 4,501 4,585 4,335
Income (loss) before income taxes,
accounting change and
extraordinary item . . . . . . . 1,556 948 1,513 576 223 (842) 541
Income taxes . . . . . . . . . . . 176 232 343 147 41 (253) 129
Net income (loss) before accounting
change and extraordinary item . . $ 1,380 $ 716 $ 1,170 $ 429 $ 182 $ (589) $ 412
Accounting change and extraordinary
item . . . . . . . . . . . . . --- --- --- 175 41 --- ---
Net income (loss) . . . . . . . . . $ 1,380 $ 716 $ 1,170 $ 604 $ 223 $ (589) $ 412
Per Share Data:
Net income (loss) before accounting
change and extraordinary item -
primary . . . . . . . . . . . . . . $ .76 $ .40 $ .65 $ .44 $ .19 $ (.63) $ .44
Net income (loss) before accounting
change and extraordinary item -
fully diluted . . . . . . . . . . . .74 .39 .64 .44 .19 (.63) .44
Primary net income (loss) . . . . . $ .76 $ .40 $ .65 $ .62 $ .24 $ (.63) $ .44
Fully diluted net income (loss) .74 .39 .64 .61 .24 (.63) .44
Book value . . . . . . . . . . . . $ 8.23 $ 7.16 $ 7.38 $ 6.85 $ 6.83 $ 6.62 $ 7.24
Balance sheet data at period-end:
Total assets . . . . . . . . . . . $199,237 $181,676 $178,587 $171,724 $ 97,047 $103,171 $101,291
Total earning assets . . . . . . . 180,613 166,084 163,636 153,442 83,936 91,417 90,714
Loans, net of unearned income . . . 128,175 110,828 115,156 104,181 61,519 72,964 67,368
Deposits . . . . . . . . . . . . . 181,299 166,531 162,633 156,991 89,851 94,957 93,569
Stockholders' equity . . . . . . . 14,967 13,022 13,413 12,383 6,460 6,184 6,760
Average balance sheet data:
Total assets . . . . . . . . . . . $181,842 $170,416 $172,316 $ 95,681 $ 95,934 $100,710 $ 98,081
Total earning assets . . . . . . . 169,244 156,412 158,468 86,860 85,692 92,008 89,068
Loans, net of unearned income . . . 120,187 105,525 107,452 62,036 67,183 71,397 65,458
Deposits . . . . . . . . . . . . . 164,391 153,559 158,322 87,824 88,803 92,662 90,436
Stockholders' equity . . . . . . . 14,140 12,650 12,791 6,968 6,411 7,008 6,592
Performance ratios:
Net income as a percentage of:
Average equity (1) . . . . . . . 13.05% 7.57% 9.15% 8.67% 3.48% (8.40)% 6.25%
Average assets (1) . . . . . . . 1.01% .56% .68% .63% .23% (.58)% .42%
</TABLE>
(1) Annualized
11
<PAGE>
Comparative Per Share Data
The following tables set forth Bancshares' and Triad's book
values, cash dividends declared and net income per share at the date and
for the periods presented (i) on a historical basis, and (ii) on a pro
forma combined and equivalent per share of Triad Stock basis (each
assuming that the Merger became effective on the specified dates and was
accounted for as a "pooling-of-interests"). The following information
does not include the effects of a recently announced merger by
Bancshares which is not considered to be material. See "UNITED CAROLINA
BANCSHARES AND UNITED CAROLINA BANK - Recent Events."
<TABLE>
<CAPTION>
Book value per common share: At September 30, 1995 At December 31, 1994
<S> <C> <C>
Bancshares . . . . . . . . . . . . . . . . . . . $19.79 $17.92
Triad . . . . . . . . . . . . . . . . . . . . . . 8.23 7.38
Pro forma combined (1) . . . . . . . . . . . . . . 19.44 17.60
Equivalent per share for Triad (2) . . . . . . . 11.07 10.02
</TABLE>
(1) Pro forma combined amounts are calculated using the shares
of Triad Stock outstanding multiplied by the Exchange Rate
of 0.569444 of a share of Bancshares Stock for each share
of Triad Stock plus the shares of Bancshares outstanding
for the period indicated.
(2) Equivalent per share amount is calculated by multiplying
the pro forma combined amount by the Exchange Rate of
0.569444 of a share of Bancshares Stock for each share of
Triad Stock.
<TABLE>
<CAPTION>
Nine months ended Years ended December 31,
September 30, 1995 1994 1993 1992
<S> <C> <C> <C> <C>
Cash dividends per common share:
Bancshares . . . . . . . . . . . . . . $.72 $.84 $.76 $.66
Triad . . . . . . . . . . . . . . . . . --- --- --- ---
Pro forma combined (1) . . . . . . . . . .67 .78 .73 .64
Equivalent per share for Triad (2) . . .38 .44 .42 .36
Income per common share before cumulative
effects of changes in accounting methods and
extraordinary item:
Bancshares . . . . . . . . . . . . . . $2.25 $2.05 $2.23 $1.96
Triad (3) . . . . . . . . . . . . . . . .74 .64 .44 .19
Pro forma combined . . . . . . . . . . 2.19 1.99 2.18 1.90
Equivalent per share for Triad (2) . . 1.25 1.13 1.24 1.08
</TABLE>
(1) Pro forma combined amounts are calculated using the shares
of Triad Stock outstanding multiplied by the Exchange Rate
of 0.569444 of a share of Bancshares Stock for each share
of Triad Stock plus the shares of Bancshares outstanding
for the period indicated.
(2) Equivalent per share amounts are calculated by multiplying
the pro forma combined amounts by the Exchange Rate of
0.569444 of a share of Bancshares Stock for each share of
Triad Stock.
(3) Reflects fully diluted income per common share before
cumulative effect of a change in accounting method and
extraordinary item.
The following table sets forth (i) on a historical basis,
the closing price per share of Bancshares Stock on the Nasdaq National
Market on October 18, 1995 (the last trading date prior to the public
announcement of the Merger), and (ii) the market value of a share of
Triad Stock on that date, and (iii) the equivalent pro forma market
value of Triad Stock on that date (assuming that the Merger became
effective on that date and was accounted for as a pooling-of-interests).
On October 18, 1995, the last reported sale price for Bancshares Stock
on the Nasdaq National Market was $36.25. The last reported sale price
of Triad Stock on October 18, 1995 was $15.25. (See "MARKET AND
DIVIDEND INFORMATION REGARDING TRIAD STOCK AND BANCSHARES STOCK.")
At October 18, 1995
Bancshares Stock (1) . . . . . . . . . . . . . . . . . . . $ 36.25
Triad Stock (1) . . . . . . . . . . . . . . . . . . . . . . $ 15.375
Equivalent pro forma Triad Stock (2) . . . . . . . . . . . $ 20.64
______________________
(1) The price shown for Bancshares Stock is the closing price
on the Nasdaq National Market on the indicated date. The
value shown for the Triad Stock is the average of the
closing bid and asked prices of Triad Stock on October 18,
1995.
(2) The equivalent pro forma amount is calculated by
multiplying the closing price of Bancshares Stock on
October 18, 1995, by the Exchange Rate.
12
<PAGE>
PROPOSAL 1: THE MERGER
The following is a summary of information about the Merger and
certain of the important terms and conditions of the Agreement and
related matters and is not intended to be a complete description of all
material facts regarding the Merger. This summary is subject to and
qualified in all respects by reference to the Agreement attached hereto
as Appendix A, the statutes regarding Dissenter's Rights attached hereto
as Appendix B, and to the other Appendices to this Prospectus/Proxy
Statement (each of which is incorporated herein by reference). Each
Triad Shareholder is urged to read the Agreement, this Prospectus/Proxy
Statement and the other Appendices in their entirety.
General
At the Special Meeting, a proposal will be introduced for Triad's
shareholders to approve the Agreement. The Agreement provides for the
Merger of Triad into UCB and the conversion and exchange of the
outstanding shares of Triad Stock (other than shares held by Triad
shareholders who properly exercise their Dissenter's Rights) into and
for newly issued shares of Bancshares Stock. At the Effective Time, (i)
Triad will be merged into and its existence will be combined with that
of UCB, and Triad will cease to exist as a separate entity, (ii) Triad's
shareholders (other than shareholders who exercise their Dissenter's
Rights) will become shareholders of Bancshares, and (iii) UCB will be
the surviving corporation in the Merger and will continue to exist
(under the management of its current officers and directors) as a
wholly-owned subsidiary of Bancshares and to conduct its business as a
North Carolina banking corporation under the supervision and regulation
of the Commissioner and the FDIC. (See " - Conversion of Triad Stock and
Triad Options; Exchange Rate" and "RIGHTS OF DISSENTING SHAREHOLDERS.")
Triad's deposit accounts will become deposit accounts of UCB and will
continue to be insured by the FDIC to the maximum amount permitted by
law.
Conversion of Triad Stock and Triad Options; Exchange Rate
At the Effective Time, and without any action on the part of
Bancshares, Triad or Triad's shareholders, each share of Triad Stock
held of record by Triad's shareholders (other than shares as to which a
shareholder properly exercises Dissenter's Rights) automatically will be
converted into and become, and thereafter may be exchanged for, 0.569444
of a newly issued share of Bancshares Stock. (See "RIGHTS OF DISSENTING
SHAREHOLDERS.") However, if the 30-Day Average is greater than $40.39
per share, then the Exchange Rate will be adjusted to equal the ratio
(rounded to six decimal places) produced by dividing $23.00 by the
30-Day Average, and if the 30-Day Average is less than $31.61 per share,
then the Exchange Rate will be adjusted to equal the ratio (rounded to
six decimal places) produced by dividing $18.00 by the 30-Day Average.
Provided, however, in the event the 30-Day Average is greater than
$43.20 and Bancshares or UCB has become a party to an agreement in
principle or a binding agreement that contemplates a merger of
Bancshares or UCB into or with any other entity (other than with the
other or with any affiliated corporation) and in which Bancshares or UCB
will not be the surviving corporation or a sale of substantially all of
Bancshares' or UCB's assets to any other such entity, the Exchange Rate
shall be fixed at 0.569444. However, Bancshares may terminate the
Agreement (unless Bancshares has agreed to be acquired) if the 30-Day
Average exceeds $43.20 and Triad may terminate the Agreement if the
30-Day Average is less than $28.80. Given these minimum and maximum
prices, the Exchange Rate could fluctuate between a high of .625000 and
a low of .532407. As of January __, 1996, the 30-Day Average was
$_____________ which would have resulted in an Exchange Rate equal to
___________. If there is a change in the number of outstanding shares
of Bancshares Stock or Triad Stock prior to the Effective Time as a
result of a stock dividend, stock split, reclassification or other
subdivision or combination of outstanding shares, then an appropriate
and proportionate adjustment will be made in the Exchange Rate as
necessary to eliminate any dilutive or antidilutive effect of such
change in outstanding shares. Management of Bancshares and Triad
currently are not aware of any change (completed or proposed) in the
outstanding shares of Bancshares Stock or Triad Stock such as would
result in an adjustment in the Exchange Rate.
At the Effective Time, all rights with respect to then outstanding
options held by certain employees and directors of Triad to purchase
shares of Triad Stock ("Triad Options"), whether or not then
exercisable, will be converted into (at the Exchange Rate) and will
become rights to purchase Bancshares Stock equal to the number of shares
of Triad Stock originally covered by the options multiplied by the
Exchange Rate, and Bancshares will assume Triad's obligations with
respect to each such Triad Option in accordance with the terms of the
applicable stock option plan and agreement under which such Triad Option
was granted. (See " - Interests of Certain Persons With Respect to the
Merger.")
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Surrender and Exchange of Certificates
Following the Effective Time, all certificates (other than shares
held by Triad shareholders who properly exercise their Dissenter's
Rights) formerly evidencing shares of Triad Stock ("Old Certificates")
will evidence the right of the registered holders thereof to receive and
may be exchanged for certificates ("New Certificates") evidencing the
number of whole shares of Bancshares Stock into which such holders' shares of
Triad Stock will have been converted.
As of the Effective Time, Triad's stock transfer books will be
closed and no further transfer of Triad Stock or of an Old Certificate
will be recognized or registered on Triad's stock transfer records. As
soon as possible following the Effective Time, Triad's shareholders will
receive transmittal forms with instructions for forwarding their Old
Certificates for surrender to Bancshares' exchange agent (the "Exchange
Agent"). Upon proper surrender to the Exchange Agent of their Old
Certificates (together with properly completed transmittal forms), each
Triad shareholder will be entitled to receive (i) New Certificates
representing the number of whole shares of Bancshares Stock into which
his or her shares of Triad Stock will have been converted, together with
cash (without interest) for any fractional share (see " - Treatment of
Fractional Shares"), or (ii) in the case of a shareholder properly
exercising his or her Dissenter's Rights, the amount of cash determined
as provided in Article 13 of the North Carolina Business Corporation
Act. (See "RIGHTS OF DISSENTING SHAREHOLDERS.")
Until surrendered as described above, each Old Certificate will be
deemed for all corporate purposes to evidence only the right to receive
the number of shares of Bancshares Stock to which the Triad shareholder
will have become entitled plus cash for any fractional share interest or
the right to Dissenter's Rights. However, after the Effective Time and
regardless of whether they have surrendered their Old Certificates,
Triad's shareholders will be entitled to vote and to receive any
dividends or other distributions (for which the record date is after the
Effective Time) on the number of whole shares of Bancshares Stock into
which their Triad Stock has been converted; provided, however, that no
such dividends or other distributions will be paid to the holders of
such Old Certificates unless and until the Old Certificates are
surrendered. Upon surrender and exchange of each Old Certificate, there
will be paid the amount, without interest thereon, of dividends and
other distributions, if any, which became payable on the shares of
Bancshares Stock represented by such certificate after the Effective
Time but had not been paid to the record owner thereof.
Shareholders whose Old Certificates have been lost, stolen or
destroyed will be required to furnish to Bancshares evidence
satisfactory to the Exchange Agent of ownership of such Old Certificates
and of such loss, theft or destruction, and to furnish appropriate and
customary indemnification (including an indemnity bond) in order to
receive the New Certificates and cash to which they are entitled.
TRIAD'S SHAREHOLDERS SHOULD NOT FORWARD THEIR OLD CERTIFICATES TO
THE EXCHANGE AGENT UNTIL THEY RECEIVE INSTRUCTIONS TO DO SO.
Treatment of Fractional Shares
No fraction of a share of Bancshares Stock, or any script or
certificate representing any such fractional share, will be issued in
connection with the Merger, and no right to vote or to receive any
dividend or other distribution shall attach to any such fractional
share. At the Effective Time, Bancshares will deliver cash to the
Exchange Agent in an amount equal to the aggregate "market value" of all
such fractional shares. Each Triad shareholder who otherwise would be
entitled to receive a fraction of a share of Bancshares Stock shall,
upon the surrender and exchange of his or her Old Certificates, and in
lieu of such fractional share, be entitled to receive cash (without
interest) from the Exchange Agent in an amount equal to that fraction
multiplied by the "market value" of one whole share of Bancshares Stock.
As used above, "market value" shall be equal to the average of the
closing prices of Bancshares Stock on the Nasdaq National Market for
the 30 consecutive trading days immediately preceding the Special Meeting.
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Background of and Reasons for the Merger.
Since its organization in 1982, Triad has operated as a
community-oriented commercial bank serving the Piedmont Triad region of
North Carolina. The community-oriented banking philosophy of Triad
generally has allowed it to compete effectively and profitably with the
other banking institutions in its local market. During the last ten
years, however, competition has dramatically increased with other types
of financial institutions offering services traditionally offered only
by banks. This increased competition has created an increase in public
demand for a broader range of consumer services from community banking
institutions. Providing such services and products to customers
requires significant amounts of technology, in terms of both equipment
and software. Additionally, since 1991 the federal banking agencies
have imposed many additional regulations on banks. The increased
regulatory oversight has burdened Triad due to its small size relative
to many of its competitors.
The increase in competition has been accelerated in the last few
years through the consolidation in the banking industry in North
Carolina whereby many smaller financial institutions have been acquired
by larger state-wide or regional banks. Given the rapid increase in
technology and the greater size of many of Triad's competitors, Triad
would have to expend significant amounts of capital to invest in the
equipment and software necessary to remain competitive.
Given Triad's attractive franchise in Greensboro, Winston-Salem
and Asheboro, UCB became interested in acquiring Triad to expand its
operations into the Piedmont Triad region of North Carolina. During
July 1995, UCB approached Triad to indicate that, if Triad chose to
consider being acquired, UCB would be interested in discussing a
possible combination transaction. In mid-August 1995, Triad's Chairman
indicated to UCB that Triad's Board of Directors would be willing to
discuss a possible combination with UCB. In mid-September 1995, UCB
informally proposed the terms of an acquisition of Triad. On September
25, 1995, Triad's Board of Directors agreed to begin merger negotiations
with UCB.
Triad recognized that remaining an independent institution may not
best serve the long-term interests of Triad and its shareholders. In
recent years, Greensboro, Winston-Salem and Asheboro have lost several
large community financial institutions which were acquired by state-wide
banks. Additionally, the increased competition to provide
cost-effective services and products is a challenge to Triad which has
fewer resources than many of its competitors in its market area.
Further, Triad Stock is lightly traded, and, therefore, Triad's
shareholders have limited ability to sell their Triad Stock.
To assist in its decision, Triad engaged Carson Medlin and sought
the advice of special legal counsel. The Board of Directors believed
that UCB's proposal was an attractive offer and that Triad could not
create greater shareholder value from independent operations in the
foreseeable future. Carson Medlin gave the Board of Directors its oral
opinion that the UCB proposal was fair, from a financial viewpoint, to
Triad's shareholders. The Board of Directors of Triad also believed
that the Merger would give shareholders of Triad the opportunity for
growth in a widely traded stock and ownership in a company with a good
history of earnings and cash dividends. Further, the Board of Directors
considered it important to recognize the contribution of its employees
to the profitability of Triad. As the acquisition would be a new market
for UCB, the Merger would offer the best alternative to maintaining
Triad's existing branch and employee structure rather than an
acquisition by a bank with existing branches and personnel in Triad's
market area.
On October 13, 1995, the Chairman, President and Executive Vice
President of UCB and Bancshares met with Triad's Board of Directors and
formally proposed the terms of the Merger. Considering all of the
factors discussed above, the Board of Directors of Triad determined it
to be in the best interests of Triad and its shareholders to agree to be
acquired by UCB. On October 17, 1995, Triad's Board of Directors
approved the Agreement which, in turn, was approved by UCB's and
Bancshares' Boards of Directors on October 19, 1995.
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Recommendation
TRIAD'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT TRIAD'S
SHAREHOLDERS VOTE TO APPROVE THE AGREEMENT. Triad's Board of Directors
has adopted the Agreement and believes the Merger is in the best
interests of Triad and its shareholders and unanimously recommends that
Triad's shareholders vote FOR approval of the Agreement. The Board of
Directors considered a variety of factors in approving the Agreement,
including without limitation (i) the amount and nature of the
consideration to be received by Triad's shareholders, (ii) the greater
liquidity in and potential for increases in the value of Bancshares
Stock as compared to Triad Stock, (iii) Bancshares' cash dividend and
earnings record, (iv) the treatment of Triad's officers and employees,
(v) the more efficient and profitable operation of Triad through
economies of scale, and (vi) the ability to offer expanded services to
Triad's customers.
Fairness Opinion
Engagement of Financial Advisor. The Board of Directors of Triad
retained Carson Medlin to act as its financial advisor in connection
with the Merger. Triad selected Carson Medlin as its financial advisor
on the basis of Carson Medlin's historical relationship with Triad as
well as such firm's experience and expertise in transactions similar to
the Merger. Carson Medlin is a National Association of Securities
Dealers, Inc. member investment banking firm which specializes in the
securities of United States financial institutions. As part of its
investment banking activities, Carson Medlin is regularly engaged in the
valuation of United States financial institutions and transactions
relating to their securities. Except as described herein, Carson Medlin
is not affiliated in any way with Triad, Bancshares or their respective
affiliates.
As part of its engagement, representatives of Carson Medlin attended the meeting
of Triad's Board held on October 17, 1995, at which meeting the terms of the
proposed Merger were discussed and considered. At that meeting Carson Medlin
rendered its oral opinion that, as of that date, the consideration to be
received by the shareholders of Triad Stock pursuant to the Merger
consisting of 0.569444 shares of Bancshares Stock for each share of Triad Stock
is fair, from a financial point of view, to the shareholders of Triad. Carson
Medlin delivered its written opinion dated November 28,1995 to the Board of
Directors of Triad on November 28, 1995, stating that the aggregate
consideration to be received by the shareholders of Triad for their Triad Stock
is fair, from a financial point of view. Carson Medlin subsequently confirmed
such opinion in writing as of the date of this Prospectus/Proxy Statement. The
opinion delivered orally on October 17, 1995, the written opinion dated November
28, 1995 and the updated written opinion dated the date of this Prospectus/Proxy
Statement are collectively referred to hereafter as the "Opinion".
The full text of Carson Medlin's written opinion dated the date of this
Prospectus/Proxy Statement is attached as Appendix C to this
Prospectus/Proxy Statement and should be read in its entirety with
respect to the assumptions made, matters considered and qualification
and limitations on the review undertaken by Carson Medlin in connection
therewith. The Carson Medlin Opinion is substantially identical to the
written opinion delivered to the Triad Board dated November 28, 1995.
Carson Medlin's Opinion does not constitute a recommendation to any
Triad shareholder as to how such shareholder should vote at the Special
Meeting or as to any other matter. The summary of the Opinion of Carson
Medlin set forth in this Prospectus/Proxy Statement is
qualified in its entirety by reference to the full text of such Opinion attached
as Appendix C.
Carson Medlin has relied upon, without independent verification, the
accuracy and completeness of the information reviewed by it for purposes
of its Opinion. Carson Medlin did not undertake any independent
evaluation or appraisal of the assets and liabilities of Triad, nor was
it furnished with any such appraisals. Carson Medlin assumed that the
financial forecasts reviewed by it have been reasonably prepared on a
basis reflecting the best currently available judgments and estimates of
the management of Triad, and that such projections will be realized in
the amounts and at the times contemplated thereby. Carson Medlin is not
expert in the evaluation of loan portfolios, under-performing or
non-performing assets, net charge-offs or the adequacy of allowances for
losses with respect thereto, has not reviewed any individual credit
files, and has assumed that such allowances for each of Triad and
Bancshares are in the aggregate adequate to cover such losses. Carson
Medlin assumed that the Merger will be recorded as a
pooling-of-interests under generally accepted accounting principles.
Carson Medlin's Opinion is necessarily based on economic, market and
other conditions as in effect on the date of its analysis, and on
information as of various earlier dates made available to it.
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Certain financial forecasts furnished to Carson Medlin and used by it in
certain of its analyses were prepared by the management of Triad. Neither
Triad nor Bancshares publicly discloses their management's internal financial
projections of the type provided to Carson Medlin in conjunction with
its review of the Merger. Such projections were not prepared for, or
with a view toward, public disclosure.
In connection with rendering its Opinion, Carson Medlin performed a variety of
financial analyses. The preparation of a financial fairness opinion of this
nature involves various determinations as to the most appropriate and relevant
methods of financial analyses and the application of those methods to the
particular circumstances, and, therefore, is not readily susceptible to partial
analysis or summary description. Carson Medlin believes that its analyses must
be considered together as a whole and that selecting portions of such analyses
and the facts considered therein, without considering all other factors and
analyses, could create an incomplete view of the analyses and the process
underlying Carson Medlin's Opinion. In its analyses, Carson Medlin made numerous
assumptions with respect to industry performance, business and economic
conditions, and other matters, many of which are beyond the control of Triad and
Bancshares and which may not be realized. Any estimates contained in Carson
Medlin's analyses are not necessarily predictive of future results or values,
which may be significantly more or less favorable than such estimates.
Estimates of values of companies such as Triad and Bancshares do not purport
to be appraisals or necessarily reflect the prices at which such companies or
their securities may actually be sold. None of the analyses performed by
Carson Medlin were assigned a greater significance by Carson Medlin than
any other.
In connection with rendering its Opinion, Carson Medlin reviewed (i) the Merger
Agreement ; (ii) the Annual Reports to shareholders of Triad and Bancshares,
including the audited financial statements, for the five years ended December
31, 1994 ; (iii) Bank Call Reports for Triad for the five years ended December
31, 1994 and the nine month period ended September 30, 1995; (iv) certain
interim financial statements of Bancshares including the Quarterly Report to
shareholders for the nine month period ended September 30, 1995; (v) certain
financial and operating information with respect to the business, operations and
prospects of Triad and Bancshares; and (vi) this Prospectus/Proxy Statement.
Carson Medlin also (a) held discussions with members of the senior management of
Triad and Bancshares regarding the historical and current business operations,
financial condition and future prospects of their respective companies; (b)
reviewed the historical market prices and trading activity for the common stocks
of Triad and Bancshares and compared them with those of certain publicly traded
companies which it deemed to be relevant; (c) compared the results of operations
of Triad and Bancshares with those of certain banking companies which it deemed
to be relevant; (d) compared the proposed financial terms of the Merger with the
financial terms, to the extent publicly available, of certain other recent
business combinations of commercial banking organizations; (e) analyzed the pro
forma financial impact of the Merger on Bancshares; and (f) conducted such other
studies, analyses, inquiries and examinations as Carson Medlin deemed
appropriate.
The following is a summary of selected analyses performed by Carson Medlin in
connection with its Opinion.
Transaction Summary. Carson Medlin noted that the value of the aggregate
consideration to be received by the shareholders and optionholders of Triad
pursuant to the Merger valued at September 30, 1995 was approximately $40
million. This value represented 267% of Triad's September 30, 1995 stated book
value, 21.7x Triad's annualized nine months September 30, 1995 earnings, a
15.7% premium on Triad's core deposits based on September 30, 1995 stated book
value, and 20.1% of Triad's September 30, 1995 total assets. This value
represented 233% of Triad's September 30, 1995 book value as adjusted for the
pro forma exercise of Triad stock options and the pro forma issuance of shares
of Triad Stock pursuant to Triad's Directors Deferred Compensation Plan, 26.5x
Triad's annualized earnings for the nine months ended September 30, 1995,
excluding the effect of the net operating loss carryforward realized during the
period, and a 14.6% premium on Triad's core deposits based on September 30,
1995 book value as adjusted for the pro forma exercise of Triad stock
options and the pro forma issuance of Triad Stock pursuant to Triad's
Directors Deferred Compensation Plan.
Stock Trading History. Carson Medlin examined the history of the trading prices
for Bancshares Stock and the relationship between movements of Bancshares Stock
prices and movements in the CRSP Total Return Index for the NASDAQ Stock Market
(US) and the CRSP Total Return Index for the NASDAQ Bank Stocks.
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This analysis showed that for the five year period ending December 31,
1994, the increase in the market value of Bancshares Stock (including
the reinvestment of cash dividends) was 215.8% compared to an increase
(including dividend reinvestment) in the CRSP Total Return index for the
NASDAQ Stock Market (US) of 176.9% and an increase (including dividend
reinvestment) of 198.7% in the CRSP Total Return Index for NASDAQ Bank Stocks.
During the five year period the equities market increased its
valuation of Bancshares slightly more than that of NASDAQ banks and more
than the broader NASDAQ market.
Carson Medlin also compared Bancshares stock price performance to those
of four other North Carolina-based publicly-traded mid-size regional
bank holding companies, defined as those with assets between $3.4 and
$20.7 billion (the "Peer Banks"). The four Peer Banks include: Centura
Banks, Inc., CCB Financial Corporation, Southern National Corporation,
and First Citizens BancShares, Inc. Carson Medlin considers this North
Carolina group of financial institutions comparable to Bancshares as to
financial characteristics and stock price performance and trading
volume.
During the 12 months ending September 30, 1995, the ratio of stock price
to trailing 12 months earnings per share for the Peer Banks was: a low
9.2 x, a high 17.2 x, and a mean of 10.7 x. Bancshares's price to earnings
ratio for the same period ranged from a low of 9.8 x to a high of 15.6 x, with a
mean of 13.2 x. Bancshares Stock has traded on average at a higher price
to earnings ratio than the Peer Banks.
During the 12 months ending September 30, 1995, the stock price as a
percentage of book value for Peer Banks was: a low of 101%, a high of
189%, and a mean of 144%. Bancshares price to book ratio for the same period
ranged from a low of 131% to a high of 182%, with a mean of 157%. Bancshares
Stock has traded on average at a higher price to book value ratio than
the Peer Banks.
Carson Medlin also compared the recent trading volume in Bancshares
Stock, which trades on the NASDAQ National Market System, with that of
the Peer Banks.
During the four quarters ending September 30, 1995, the monthly trading
volume as a percentage of the total outstanding shares of the Peer Banks
ranged from a low of .20% to a high of 10.00%, with a mean of 1.95%.
Bancshares's recent monthly trading volume to outstanding shares ranged
from a low of .25% to a high of 2.50% with a mean of 1.16%. Carson Medlin
considers Bancshares Stock to be liquid and marketable in comparison
with the Peer Banks in particular and other regional bank holding
companies in general.
Carson Medlin also considered recent trading prices and volumes of Triad
Stock. As Triad Stock has not traded in volumes sufficient to be
meaningful, Carson Medlin placed relatively less importance on the
market price of Triad Stock than on other indicators of its value.
Industry Comparative Analysis. In connection with rendering its Opinion,
Carson Medlin compared selected operating results of Triad to those of
44 publicly-traded community commercial banks in Alabama, Florida,
Georgia, North Carolina, South Carolina, and Virginia (the "SIBR Banks")
as contained in the SOUTHEASTERN INDEPENDENT BANK REVIEW(TM), a
proprietary research publication published by Carson Medlin quarterly
since 1991. The SIBR Banks range in asset size from approximately $82
million to $1.8 billion and in shareholders' equity from approximately
$9 million to $184 million. Approximately 91% are listed on NASDAQ
(including Bulletin Board, NASDAQ Small Cap Market, and NASDAQ National Market
System) and 9% are not traded on an established market. Carson Medlin
considers this group of financial institutions more comparable to Triad
than larger, more widely traded regional financial institutions as to
financial characteristics. Carson Medlin compared, among other factors,
the profitability, capitalization, deposit growth rate, loan to deposit
ratio, and asset quality of Triad to these financial institutions. In
comparison to the average for the SIBR Banks, Triad has a lower level of
shareholders' equity to total assets, is less profitable and has
slightly lower asset quality ratios.
Carson Medlin also compared selected operating results of Bancshares to the four
Peer Banks. Carson Medlin compared selected balance sheet data, asset quality,
capitalization and profitability ratios and stock market statistics, using
financial data at or for the nine months ended September 30, 1995 and stock
market data as of September 30, 1995. This comparison showed, among other
things, that (i) Bancshares's net interest margin was 4.80% compared to a mean
of 4.40% for the Peer Banks; (ii) Bancshares's efficiency ratio (defined as
noninterest expense divided by the sum of
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noninterest income and net interest income before provision for loan losses)
was .60% compared to a mean of .64% for the Peer Banks; (iii) Bancshares's
return on average assets was 1.25% compared to a mean of 0.98% for the Peer
Banks; (iv) Bancshares's return on average equity was 16.08% compared to a
mean of 12.78% for the Peer Banks; (v) Bancshares's average stockholders'
equity to average total assets was 7.78% compared to a mean of 7.58% for the
Peer Banks; (vi) Bancshares's nonperforming assets to total assets were .30%
compared to a mean of .33% for the Peer Banks; and, (vii) Bancshares's loan
loss reserves to nonperforming assets was 365% compared to a mean of 315% for
the Peer Banks; and, (viii) Bancshares's market capitalization was $513
million compared to the Peer Banks, which ranged from a high of $2.7 billion
to a low of $487 million.
Comparable Transaction Analysis. Carson Medlin reviewed certain information
relating to 20 announced or completed bank mergers in markets in the
southeastern United States that it deemed to have demographic characteristics
similar to that of Triad's. These 20 transactions were publicly announced
between January 1993 and June 1995 and involved acquired banks with
total assets between $79 million and $1,030 million (the "SE Comparable
Transactions"). The SE Comparable Transactions were (acquiror/acquiree): Regions
Financial/Union Bank & Trust , National Commerce/Alabama National, AmSouth
Bancorp./First National Bank of Clearwater, AmSouth Bancorp./Orange Banking
Corp., AmSouth Bancorp./Citizens National Bank, AmSouth Bancorp./Tampa Banking
Company, Huntington Bancshares/Security National Corp., Bank South
Corp./Chattahoochee Bancorp., Triangle Bancorp/New East Bancorp, Centura Banks
Inc./First Charlotte Financial, United Carolina Bancshares/Bank of Iredell, CCB
Financial Corp./Security Capital Corp., Triangle Bancorp/Village Bank, BB&T
Financial Corp./LSB Bancshares (SC), NationsBank/ RHNB Corp., Synovus Financial
Corp./NBSC Corp., First Virginia Banks/Cleveland Bank & Trust, First
Tennessee National Corp./Community Bancshares, Bancorp South Inc./Wes-Tenn
Bancorp., Mercantile Bankshares Corp./Fredericksburg National Bank. Carson
Medlin considered, among other factors, the earnings, capital level, asset size
and quality of assets of the acquired financial institutions. Carson Medlin
compared the transaction prices to trailing four quarters earnings, stated book
value, and total assets.
For the SE Comparable Transactions, Carson Medlin calculated a range of purchase
prices as a percentage of book value from a low of 107.9% to a high
of 287.4%, with a mean of 213.0%. The aggregate consideration to be received
by Triad's shareholders and optionholders implied by the terms of the Agreement
is approximately $40 million. This is 267% of Triad's stated book value and 233%
of Triad's book value as adjusted for the pro forma exercise of Triad stock
options and the pro forma issuance of shares of Triad Stock pursuant to Triad's
Directors Deferred Compensation Plan. Both measures are above the average for
the SE Comparable Transactions.
Carson Medlin calculated a range of purchase prices as a multiple of earnings
for the SE Comparable Transactions from a low of 11.2 x to a high of 32.0 x,
with a mean of 18.6 x. The aggregate consideration implied by the terms of
the Agreement gives a price to earnings multiple of 21.7 x Triad's annualized
nine months September 30, 1995 earnings and 26.5 x Triad's annualized nine
months earnings adjusted for the effect of the net operating loss carryforward
applied in the year. Both measures are above the average for the SE Comparable
Transactions.
Finally, Carson Medlin calculated a range of purchase prices as a percentage of
total assets for the SE Comparable Transactions from a low of 12.3% to a high
of 26.2%, with a mean of 18.4%. Based on Triad's September 30, 1995 total
assets of $199.2 million, the purchase price implied by the terms of the
Agreement is approximately 20.1% of Triad's total assets, above the
average for the SE Comparable Transactions.
No company or transaction used in the preceding Industry Comparative or
Comparable Transaction Analyses as a comparison is identical to Triad or the
contemplated transaction. Accordingly, an analysis of the results of these
analyses necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of Triad and other
factors that could affect the value of the companies to which it is
being compared. Mathematical analysis (such as determining the average
or median) is not, in itself, a meaningful method of using comparable
industry or transaction data.
Review of Research on Bancshares. Carson Medlin reviewed certain research
reports concerning Bancshares published in 1995. The investment firms
originating these reports included Wheat First Butcher Singer, The
Robinson-Humphrey Company, The Chicago Corp., Keefe Bruyette & Woods, J.C.
Bradford, Interstate/Johnson Lane, Davenport & Co., and Alex. Brown & Sons.
Information considered in these reports by Carson Medlin included, but was not
limited to, the
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authors' qualitative assessments of Bancshares as well as estimates of
Bancshares's future profitability. Carson Medlin concluded that these
research reports, considered collectively, were positive regarding
Bancshares's operations and future prospects.
Present Value Analysis. Carson Medlin calculated the present value of Triad
Stock on the basis of Triad remaining an independent bank and assuming Triad
management's estimate of future earnings, dividends and asset growth rates. The
analysis considered two growth scenarios, discount rates of 14% through 16%
chosen to reflect different assumptions regarding the required rates of return
of holders or prospective buyer's of Triad Stock, and an "exit point" of 5
years at 200% of book value. On the basis of these various assumptions, Carson
Medlin calculated a present value of Triad Stock on a stand-alone basis ranging
from $17 million to $33 million. As of September 30, 1995, the terms of the
Agreement imply aggregate consideration to be received by Triad shareholders
and optionholders of approximately $40 million.
Contribution Analysis. According to the terms of the Agreement, Triad
shareholders will receive approximately 1,035,609 shares of Bancshares
Stock (based on Triad's September 30, 1995 outstanding shares of
1,818,623). At September 30, 1995, there were 14,768,740 shares of
Bancshares common stock outstanding. Accordingly, on a pro forma basis,
as of September 30, 1995, Triad shareholders would hold approximately
6.55% of the outstanding shares of Bancshares subsequent to the Merger.
Carson Medlin analyzed the contribution of each of Triad and Bancshares
to the assets, liabilities and earnings of the pro forma combined
company as of September 30, 1995. For the nine months ended September
30, 1995, Triad would have contributed 3.99% of net income. At
September 30, 1995, Triad would have contributed 4.89% of earning assets, 5.01%
of total assets, 5.07% of total deposits, and 4.87% of stockholders equity.
Carson Medlin concluded that Triad's percentage contribution of financial
factors to the combined company is less than the percentage ownership of
Bancshares for Triad shareholders resulting from the Merger.
Shareholder Claims Analysis. Carson Medlin compared the ownership of one share
of Triad Stock to the ownership of .569444 shares of Bancshares Stock from the
perspective of claims on various balance sheet and income statement variables.
In making these comparisons, Carson Medlin found that Triad shareholders would
have a claim to more in the way of stockholders' equity, earnings, dividends,
total assets, and expected market value. In view of the higher expected value
of .569444 shares of Bancshares Stock as compared to one share of Triad Stock
at the date of the analysis, Carson Medlin concluded that .569444 shares of
Bancshares Stock is likely to have a higher value than one share of Triad
Stock at the date of consummation of the Merger.
The opinions expressed by Carson Medlin are based upon market, economic and
other relevant considerations as they existed and have been evaluated as of the
date of the opinions. Events occurring after the date of issuance of the
opinions, including but not limited to, changes affecting the securities
markets, the results of operations or material changes in the assets or
liabilities of Triad or Bancshares could materially affect the assumptions used
in preparing the opinion.
The Opinion was based upon market, economic and other relevant
considerations as they existed and have been evaluated as of the date
thereof. Events occurring after the date of issuance of the Opinion,
including but not limited to, changes affecting the securities markets,
the results of operations or material changes in the assets or
liabilities of Triad or Bancshares could materially affect the
assumptions used in preparing the Opinion.
Fees. For its services, Triad has paid Carson Medlin a $15,000
fee for services rendered to date and has agreed to pay Carson Medlin an
additional fee of $20,000 if the Merger is consummated. Triad also has
agreed to reimburse Carson Medlin for its out-of-pocket expenses
incurred in connection with activities contemplated by its engagement
and to indemnify Carson Medlin against certain liabilities that may
arise in connection with its engagement.
Required Shareholder Approval
The Agreement must be approved by Triad's shareholders before the
Merger may be consummated. Under North Carolina law, the affirmative
vote at the Special Meeting of the holders of at least two-thirds of the
total outstanding shares of Triad Stock is required to approve the
Agreement.
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Required Regulatory Approvals
The Merger is subject to approval by the Commissioner, the Banking
Commission and the FDIC.
The Agreement provides that UCB's obligation to consummate the
Merger is conditioned on receipt of all requisite regulatory approvals
upon terms and conditions that are not reasonably considered by
Bancshares or UCB to be materially disadvantageous or burdensome or to
impact so adversely the economic or business benefits of the Agreement
to Bancshares and UCB as to render it inadvisable for them to consummate
the Merger. Applications for all required regulatory approvals have
been filed and currently are pending. Although no assurances are or can
be given that such approvals will be obtained, Bancshares and Triad have
no reason to believe that any such regulatory approval will not be
obtained.
After final FDIC approval is received, a 15 to 30-day waiting
period is required prior to consummation of the Merger to allow the
United States Department of Justice to review the transaction for
antitrust considerations.
Conduct of Business Pending the Merger
The Agreement provides that, during the period from the date of
the Agreement to the Effective Time, except as provided in the
Agreement, Triad will conduct its business in the regular and usual
course in substantially the same manner as such business previously has
been conducted and, to the extent consistent with such business and
within its ability to do so, Triad will, among other things, preserve
intact its business organization, retain the services of its officers
and employees and preserve its business relationships. The Agreement
also provides that, prior to the Effective Time, and except in the
ordinary course of business or as otherwise permitted by the Agreement
or as required by applicable law or regulation, Triad will not, among
other prohibited actions, (i) incur indebtedness for borrowed money,
(ii) sell, transfer, mortgage, pledge or otherwise dispose of any of its
properties or assets, or acquire any significant assets, (iii) increase
the compensation or benefits of any of its employees, (iv) settle any
claim, action or proceeding against it involving monetary damages, (v)
make any change in its capital stock, or issue, sell, purchase, redeem
or retire shares of such stock, (vi) amend its charter or bylaws, (vii)
grant or issue any additional stock options, (viii) enter into any new
employment agreements or adopt any new employee benefit plans, (ix)
change its accounting practices, (x) acquire or open any new branch offices,
or (xi) enter into any contract other than in the ordinary course of its
business.
Dividends
The Agreement provides that Triad will not declare or pay any
dividends or make any other distributions on its capital stock. However,
if the Merger is not consummated prior to July 31, 1996 (and provided
the Agreement is extended) then in the event Bancshares declares and
pays a quarterly dividend between August 1, 1996 and the Effective Time
the Exchange Rate will be increased on a pro rata basis by any cash
dividend declared and paid by Bancshares.
Prohibition on Solicitation
The Agreement provides that Triad will not, directly or
indirectly, encourage, solicit or attempt to initiate or procure
discussions, negotiations or offers with or from any person or entity
other than Bancshares or UCB relating to a merger or other acquisition
of Triad or the purchase or acquisition of any Triad Stock or any
significant part of Triad's assets, or provide assistance to any person
in connection with any such offer. Further, Triad will not disclose to
any person or entity any information not customarily disclosed to the
public concerning Triad or its business.
Accounting Treatment
The Agreement requires that the Merger be treated as a
"pooling-of-interests" for accounting purposes. Accordingly, at the
Effective Time and under generally accepted accounting principles, the
consolidated assets and liabilities of Triad will be reported on the
books of Bancshares at their respective book values and Bancshares'
consolidated financial statements for periods prior to the Effective
Time will be restated to reflect Triad's consolidated assets,
liabilities and operations for such periods.
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Among other requirements, in order for the Merger to qualify for
pooling-of-interests accounting treatment, substantially all (at least
90%) of the outstanding shares of Triad Stock must be exchanged for
Bancshares Stock. Generally, if the number of fractional shares of
Bancshares Stock resulting from the Merger for which cash is paid,
shares repurchased by Triad or by Bancshares, and shares of holders of
Triad Stock who exercise their Dissenter's Rights, and the like together
represent more than 10% of the shares to be issued by Bancshares in
connection with the Merger, then the Merger will not qualify for the
pooling-of-interests method of accounting. Bancshares' and UCB's
obligations to consummate the Merger are conditioned on receipt by
Bancshares of assurances from its independent accountants, KPMG Peat
Marwick LLP, in form and content satisfactory to Bancshares, to the
effect that the Merger will qualify to be treated as a
pooling-of-interests for accounting purposes. If such assurances cannot
be obtained or if any event has occurred or any condition or
circumstance exists that makes it likely that the Merger does not
qualify for pooling-of-interests accounting treatment, then Bancshares
and UCB would be entitled to terminate the Agreement and abandon the
Merger. (See " - Conditions to Merger.")
Certain Income Tax Consequences
The following is a summary discussion of the material federal
income tax consequences of the Merger to Triad's shareholders. The
summary is based on the law as currently constituted and is subject to
change in the event of changes in the law, including amendments to
applicable statutes or regulations or changes in judicial or
administrative rulings, some of which could be given retroactive effect.
THIS SUMMARY IS NOT A COMPLETE DESCRIPTION OF ALL TAX CONSEQUENCES
OF THE MERGER. The summary does not address any foreign, state or local
tax consequences, except for certain North Carolina income tax
consequences, nor does it address all aspects of federal income taxation
that may apply to the Merger. Also, the Tax Opinion does not address
income tax considerations that may affect the treatment of a participant
in a Triad stock option plan or a Triad shareholder who acquired Triad
Stock pursuant to such a plan. Each Triad shareholder's individual
circumstances may affect the tax consequences of the Merger to such
shareholder. Therefore, Triad's shareholders are urged to consult their
own tax advisors as to the specific tax consequences to them of the
Merger and the exchange of their Triad Stock for shares of Bancshares
Stock (including, without limitation, tax return reporting requirements,
the application and effect of federal, foreign, state and local and
other tax laws, and the implications of any proposed changes in the tax
laws).
Bancshares and Triad have received an opinion of KPMG Peat Marwick
LLP (the "Tax Opinion"), tax advisors to Bancshares and Triad, which
reaches certain conclusions with respect to certain federal and North
Carolina income tax consequences of the Merger. Where appropriate or
useful, this discussion will refer to the Tax Opinion and particular
conclusions expressed therein. Additionally, the facts upon which the
Tax Opinion is based are set forth in such Tax Opinion which is an
exhibit to Bancshares' Registration Statement. (See "AVAILABLE
INFORMATION.") However, the Tax Opinion represents only that advisor's
best judgment as to the matters expressed therein and has no binding
effect on the Internal Revenue Service (the "IRS") or any official
status of any kind. There is no assurance that the IRS could not
successfully contest in the courts an opinion expressed by the advisor
as set forth in the Tax Opinion or that legislative, administrative or
judicial decisions or interpretations may not be forthcoming that would
significantly change the opinions set forth in the Tax Opinion. The IRS
will not currently issue private letter rulings concerning a
transaction's qualification under certain types of reorganizations or
certain federal income tax consequences resulting from such
qualification. Accordingly, no private letter ruling has been, nor is
it anticipated that such a ruling will be, requested from the IRS with
respect to the Merger.
The Tax Opinion concludes that:
(i) The Merger will constitute a tax-free reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the
Code;
(ii) No gain or loss will be recognized by Bancshares, UCB
or Triad by reason of the Merger;
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(iii) No gain or loss will be recognized by Triad's
shareholders upon their receipt of Bancshares Stock (including any
fractional share interests to which they may be entitled) solely in
exchange for their holdings of Triad Stock;
(iv) The tax basis in the Bancshares Stock received by a
Triad shareholder (including any fractional share interests to which
they may be entitled) will be the same as the tax basis in the Triad Stock
surrendered in exchange therefor;
(v) The holding period for Bancshares Stock received by a
Triad shareholder (including any fractional share interests to which
they may be entitled) in exchange for Triad Stock will include the
period during which the shareholder held the Triad Stock surrendered in
the exchange, provided that the Triad Stock was held as a capital asset
at the Effective Time;
(vi) The receipt of cash in lieu of a fractional share of
Bancshares Stock will be treated as if the fractional share of
Bancshares Stock was distributed as part of the exchange to the Triad
shareholder and then redeemed by Bancshares, resulting in capital gain
or loss measured by the difference, if any, between the amount of cash
received for such fractional share and the shareholder's basis in the
fractional share; and,
(vii) Cash received by a Triad shareholder who exercises his
or her Dissenter's Rights will be treated as having been received by the
shareholder as a distribution in redemption of his or her stock. If the
redemption meets one of the four tests set forth in Section 302 of the
Code, it will result in capital gain or loss measured by the difference,
if any, between the amount of cash received and the shareholder's basis
in the stock. If the redemption does not meet one of the four tests of
Section 302, such distribution will be treated as a dividend pursuant to
Section 301.
The Tax Opinion also concludes that the Merger will be treated in
substantially the same manner for North Carolina income tax purposes as for
federal income tax purposes.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS IN ORDER
TO MAKE AN INDIVIDUAL EVALUATION OF THE FEDERAL, STATE OR LOCAL TAX
CONSEQUENCES OF THE MERGER.
Conditions to the Merger
Consummation of the Merger is subject to various conditions
described in the Agreement, including without limitation: (i) approval
of the Agreement by Triad's shareholders; (ii) receipt of all required
regulatory approvals without the imposition by any regulatory agency of a
condition to any such approval that is considered by Bancshares or UCB to
be materially disadvantageous or burdensome or to impact the economic or
business benefits of the Merger so adversely that it would not be advisable to
consummate it; (iii) receipt of the Tax Opinion; (iv) receipt of the
Fairness Opinion and confirmation of the Fairness Opinion immediately
prior to the Effective Time; (v) satisfaction of all requirements for
the shares of Bancshares Stock to be issued in connection with the
Merger to be listed on the Nasdaq National Market as of the Effective
Time; and (vi) execution of employment agreements with certain officers
of Triad as of the Effective Time.
Bancshares' and Triad's separate obligations under the Agreement
are subject to various other conditions described in the Agreement,
including without limitation: (i) the absence of a material adverse
change in the financial condition, results of operations or business of
the other party; (ii) compliance by the other party with all laws and
regulations applicable to the transactions described in the Agreement;
(iii) the absence of any violation or breach by the other party of any
of its obligations, covenants, agreements, representations or warranties
under the Agreement; and (iv) the receipt of certain certificates and
opinions of the other party's senior officers and legal counsel.
Additionally, Bancshares' obligations are subject to certain
additional conditions, including without limitation: (i) receipt of a
written agreement as to certain matters from persons who are considered
"Affiliates" of Triad (see " - Restrictions on Resale of Bancshares Stock
Received by Certain Persons"); (ii) receipt by Bancshares of certain
assurances satisfactory to it to the effect that the Merger may be
treated as a "pooling-of-interests" for accounting purposes; and (iii)
that the aggregate of certain of Triad's expenses associated with the
Merger not exceed $175,000.
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Waiver; Amendment of Agreement
Prior to the Effective Time, any provision of the Agreement (other
than provisions relating to regulatory approvals, shareholder approval
and other approvals required by law) may be waived by the party entitled
to the benefits of such provision. Additionally, the Agreement may be
amended, modified or supplemented by Bancshares, UCB and Triad at any
time prior to the Effective Time, and whether before or after approval
by Triad's shareholders, by an agreement in writing approved by a
majority of the members of their respective Boards of Directors.
However, except as otherwise provided in the Agreement, following
approval of the Agreement by Triad's shareholders, no such amendment may
change the Exchange Rate without shareholder approval of such change.
Termination of Agreement
The Agreement may be terminated and the Merger abandoned at any
time prior to the Effective Time, whether before or after approval by
Triad's shareholders, upon the mutual agreement of Bancshares, UCB and
Triad, and may be terminated by either Bancshares or Triad if, among
other things: (i) the other party shall have violated or failed to
perform fully any of its obligations, covenants or agreements in any
material respect; (ii) any of the other party's representations or
warranties shall have been false or misleading in any material respect
when made, or if there has occurred any event or development or there
exists any condition or circumstance which has caused or, with the lapse
of time or otherwise, may or could cause any such representations or
warranties to become false or misleading; (iii) Triad's shareholders
fail to ratify and approve the Agreement, or the Special Meeting is not
held, on or before April 30, 1996; (iv) any condition to the obligations
of the terminating party is not satisfied or effectively waived, or the
Merger has not become effective, by July 31, 1996 (or such later date as
shall be mutually agreeable to Bancshares, UCB and Triad).
Additionally, Bancshares and UCB may terminate the Agreement if,
based on the advice of their legal counsel or consultants, they believe
Triad, or UCB as the successor to Triad, could incur or become
responsible or liable at any time or over a period of time or over a
period of time in an amount equal to or greater than $350,000 for
expenses or monetary damages on account of any and all remediation,
corrective action or damages relating to any discharge, disposal,
release or emission by any person of any "hazardous substance" (as
defined in the Agreement) on, from or relating to any real property
belonging to Triad or serving as collateral for any of Triad's loans, or
relating to any condition or event with respect to any such real
property which constitutes a violation of any "environmental laws" (as
defined in the Agreement).
Further, Bancshares or UCB may terminate the Agreement if the
30-Day Average is greater than $43.20 unless Bancshares or UCB has
become a party to an agreement in principle or a binding agreement that
contemplates a merger of Bancshares or UCB into or with any other entity
(other than with the other or with any affiliated corporation) and in which
Bancshares or UCB will not be the surviving corporation, or a sale of
substantially all of Bancshares' or UCB's assets to any other such entity, in
which event Bancshares shall not be able to terminate the Agreement on account
of the 30-Day Average exceeding $43.20.
Lastly, Triad may terminate the Agreement if the 30-Day Average is
less than $28.80.
In the event of the termination and abandonment of the Merger
pursuant to the termination provisions thereof, the Agreement will
become void and have no effect, except that certain provisions of the
Agreement relating to expenses, indemnification and confidentiality of
information obtained pursuant to the Agreement or in connection with the
negotiation thereof will survive any such termination and abandonment.
Closing Date and Effective Time
Following and subject to the fulfillment of all conditions
described in the Agreement, the closing of the Merger will be held on a
date specified by Bancshares (the "Closing Date") within 30 days after
the expiration of required waiting periods following receipt of
regulatory approvals. The Effective Time of the Merger will be the date
and time specified in Articles of Merger filed with the North Carolina
Secretary of State (or, if a time is not so specified, then at the time
Articles of Merger are so filed). However, in no event may the
Effective Time be more than 10 days following the Closing Date.
Although there is no assurance as to whether or when the Merger will
occur, it currently is expected that the Merger will become effective
during the first half of 1996.
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Interests of Certain Persons With Respect to the Merger
Certain members of Triad's management and Board of Directors have
certain interests in the Merger that are in addition to their interests
as shareholders of Triad generally. Triad's Board of Directors was
aware of these interests and considered them, among other things, in
adopting the Agreement and recommending the transactions contemplated
thereby.
Indemnification. Pursuant to the Agreement, from and after the
Effective Time UCB will indemnify the present and former officers and
directors of Triad against liabilities arising from actions or omissions
in their official capacities as officers and directors occurring on or
prior to the Effective Time to the extent they would have had a right to
indemnification from Triad.
Employment Agreements. In order to assure itself of their
assistance and continued services during the transition period following
the Effective Time, UCB has agreed to enter into an employment agreement
with James E. Mims (who currently serves as a director and as Chairman
and Chief Executive Officer of Triad) and with Carl I. Carlson, III (who
currently serves as a director and as President of Triad). As currently
proposed, Mr. Mims' employment agreement provides for a term ending on
December 31, 1998 during which time Mr. Mims will be paid a base salary
at an annual rate equal to Mr. Mims' base salary with Triad immediately
prior to the Effective Time, which amount shall be increased by 5%
effective on each anniversary date of the agreement. Additionally, at
the end of the term of the agreement, Mr. Mims shall retire and, upon
retirement, UCB shall pay Mr. Mims $5,000 per month for 60 months (or
until his death, whichever occurs sooner) as retirement benefits. Mr.
Mims' agreement contains a covenant generally prohibiting Mr. Mims from
competing against UCB within Triad's former banking market for a period
of time following termination of his employment with UCB. The
employment agreement for Mr. Carlson is for a term of six months. Under
the agreement, Mr. Carlson will be paid an aggregate of $200,000 in
monthly installments, which reflects the cash payment which he was due
under his current employment agreement with Triad as a result of the
acquisition of Triad by Bancshares and the termination of employment in
his current position. Additionally, for the term of the agreement, Mr.
Carlson will be paid $7,500 per month and UCB will assume Triad's
obligations under two life insurance policies maintained by Triad on the
life of Mr. Carlson. After the expiration of the agreement, Mr. Carlson
will join UCB as a regional trust officer. The employment agreements
with Mr. Mims and Mr. Carlson will supersede employment agreements
currently in effect between Triad and Mr. Mims and Mr. Carlson.
The Agreement provides that UCB will assume Triad's obligations
under a split dollar life insurance policy for James E. Mims maintained
by Triad. Also, subject to certain conditions, Triad shall transfer to
Mr. Mims and Mr. Carlson at the Effective Time the title to the
automobiles owned by Triad on the date of the Agreement and being used
by Mr. Mims and Mr. Carlson, respectively.
Triad Stock Options. There currently are outstanding Triad
Options to purchase up to an aggregate of ______ shares of Triad Stock
which are held by certain Triad employees and directors under Triad's
Employee Stock Option Plan and its Stock Options Policy for Non-Employee
Directors. At the Effective Time, each Triad Option previously granted
by Triad which was outstanding on the date of the Agreement
automatically will be converted into an option to purchase a number of
shares of Bancshares Stock equal to the number of shares of Triad Stock
covered by the option at the Effective Time multiplied by the Exchange
Rate (rounded to the nearest whole share). The purchase or exercise
price of each share of Bancshares Stock under each such option shall be
equal to the per share purchase or exercise price of the Triad Stock
previously covered by such option divided by the Exchange Rate (and
rounded to the nearest cent). Bancshares' obligations with respect to
each such converted Triad Option shall be in accordance with the terms
of the applicable Triad option plan and the related option agreement
under which such Triad Option originally was granted. From and after
the Effective Time, each Triad Option so converted may be exercised
solely for a number of shares of Bancshares Stock and for a purchase
price calculated as described above. Under the Agreement, no further
options to acquire Triad Stock may be granted by Triad.
Directors Deferred Compensation. There currently are __________
shares of Triad Stock issuable to directors of Triad under Triad's Directors
Deferred Compensation Plan. An aggregate of ___________ shares is
anticipated to be due the directors immediately before the Effective Time.
Immediately before the Effective Time, all shares due will be issued
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to the directors. At the Effective Time, each share of Triad Stock
issued to a director under the plan automatically will be converted into
Bancshares Stock at the Exchange Rate.
UCB Board of Directors. Following the Effective Time, Bancshares'
Board of Directors will appoint one member of Triad's Board of Directors
(who will be selected by mutual agreement of Bancshares and Triad) to
serve as a director of UCB until the next meeting of shareholders at
which members of UCB's Board of Directors are elected. Thereafter, such
person shall be nominated and recommended as a director of UCB for a
one-year term at such meeting of UCB's shareholders. Such person's
continued service as a director of UCB shall be subject to customary
regulatory approvals, his or her qualification to serve as a director
under applicable banking regulations and to Bancshares' and UCB's
bylaws. For his services as a director of UCB, the person as appointed
as described above, provided he remains a director of UCB, shall be
compensated until the end of such person's full one-year term as a director
of UCB in accordance with UCB's then current fee schedule.
Advisory Board Members. To assure itself of their assistance and
continued services during the transition period following the Effective
Time, Bancshares and UCB have agreed that, following the Effective Time,
and subject to their willingness to serve, each of Triad's directors and
advisory board members at the Effective Time (other than directors who
also are employees of Triad and the member who becomes a director of
UCB) will be appointed to serve as a member of the local advisory board
for one of the UCB city offices in Triad's former geographic market. For
service as an advisory board member, each Triad director who serves as
an advisory board member for UCB for a period of one year following the
Effective Time will be paid a retainer of $1,500 and fees equal to $300
per meeting attended and each Triad advisory board member will be paid a
retainer of $200 and fees equal to $50 per meeting attended. These fees
approximate the fee schedules for directors and advisory board members,
respectively, of Triad in 1995. After the first year following the
Effective Time, Triad's directors and advisory board members who
continue to serve as advisory board members will receive fees in
accordance with UCB's standard fee schedule for its local advisory
boards.
Other Employees. UCB has agreed that, so long as they remain
employed by Triad at the Effective Time, it will attempt in good faith,
but shall have no obligation, to locate suitable employment (at an
office of UCB located within a reasonable commuting distance from their
respective job locations at the Effective Time) for, and to offer
employment to, all employees of Triad. Any such employment offered by
UCB will be on an "at will" basis and will be in such a position, at
such location, and for such compensation as UCB shall determine in its
sole discretion. Triad will be permitted to pay severance compensation
to any employee of Triad at the Effective Time who is not offered
employment by UCB (other than any employee who is party to an employment
agreement with Triad). The amount of such compensation paid to any
employee shall not exceed the total of (i) two months' salary or normal
wages (at the person's then current salary or wage rate as an employee
of Triad) plus (ii) one week's salary or wages (at the person's then
current salary or wage rate as an employee of Triad) multiplied by a
number (which in no event shall be less than three or more than 14)
equal to the person's number of complete years of service as an employee
of Triad. If an employee of Triad becomes an employee of UCB and such
individual's employment is terminated without cause within 90 days
following the Effective Time, then such individual will be entitled to
receive the severance compensation described above, less any salary paid
to such employee between the Effective Time and the date of termination.
In the cases of Richard M. Cobb and James C. Edwards (who
currently serve as Senior Vice President/Chief Financial Officer and
Senior Vice President/Director of Marketing, respectively, of Triad) in
the event either of them is employed by Triad at the Effective Time and
either of them is not offered employment by UCB or refuses to accept an
offer of employment from UCB, then Triad will be permitted to pay
severance compensation to such employee in an amount equal to the total
of 12 months' salary (at the person's then current salary rate as an
employee of Triad). In the event either Mr. Cobb or Mr. Edwards becomes
an employee of UCB, UCB agrees that, if such employee voluntarily elects
to terminate employment with UCB at any time within 12 months following
the Effective Time, then UCB will pay to such terminated employee
severance compensation in an amount equal to the amount of severance
compensation such person would have received from Triad as provided
above as if he had not accepted employment with UCB, less any salary or
wages paid to such employee by UCB between the Effective Time and the
date of such employee's termination; and provided further that in the
event Mr. Cobb or Mr. Edwards becomes an employee of UCB, UCB agrees
that, if such employee's employment is terminated by UCB within 12
months following the Effective Time without cause, then UCB will pay to
such terminated employee severance compensation in an amount equal to
the amount of severance compensation such person would have received
from Triad as provided above.
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In addition, in the case of certain employees of Triad who will
not be offered employment with UCB following the Effective Time or who
will be offered employment with UCB but at salary or wage rates that are
lower than their rates as employees at Triad, UCB may specifically
request in writing that such employees remain employed by Triad until
the Effective Time and, in the case of each such employee who does
remain so employed until the Effective Time, then (whether or not such
person becomes an employee of UCB) UCB will pay to such employee as a
bonus an amount equal to 10% of the employee's then current annual
salary or wage rate as an employee of Triad. No such bonus shall be
payable to any employee unless UCB shall have specifically requested in
writing that such employee remain until the Effective Time (and which
written request shall specifically refer to such bonus). Employees of
Triad who receive such a written request but who terminate their
employment prior to the Effective Time shall not be entitled to receive
such bonus payment.
Employee Benefits. Triad employees who become employees of UCB in
connection with the Merger ("New Employees") shall become entitled to
receive all employee benefits and to participate in all benefit plans
provided by UCB on the same basis (including costs) and subject to the
same eligibility and vesting requirements, and to the same conditions,
restrictions and limitations, as generally are in effect and applicable
to other newly hired employees of UCB. However, subject to the
requirements of the Employee Retirement Income Security Act of 1974, as
amended, the Code, any governmental rules, regulations and policies
thereunder, or any other law or regulations applicable to the operation
of any such plan or program, each New Employee shall be given credit for
his or her full years of service with Triad (including its predecessor
banks, Bankers Trust of North Carolina and Piedmont State Bank) for
purposes of (i) entitlement to vacation and sick leave, and (ii)
eligibility for participation and vesting in Bancshares' Section 401(k)
savings plan and in its defined benefit pension plan; provided however,
that if Triad's pension plan is merged into UCB's pension plan each New
Employee shall be given credit for past service with Triad (but not for
past service with Triad's predecessor banks, Bankers Trust of North
Carolina and Piedmont State Bank) for purposes of the calculation and
determination of benefits under UCB's pension plan.
Restrictions on Resale of Bancshares Stock Received by Certain Persons
Certain restrictions under the 1933 Act will apply to the resale
of shares of Bancshares Stock issued to certain persons in connection
with the Merger. Any person who was an "Affiliate" of Triad at the time
the Agreement is submitted to a vote of Triad's shareholders may not
resell or transfer shares of Bancshares Stock received by him during a
period of three years following the Effective Time unless (i) such
person's offer and resale of those shares has been registered under the
1933 Act, (ii) such person's offer and resale is made in compliance with
Rule 145 promulgated under the 1933 Act (which permits limited sales
under certain circumstances), or (iii) another exemption from
registration is available. Additionally, as a condition of treating the
Merger as a pooling-of-interests for accounting purposes, Triad's
Affiliates will be prohibited from selling or transferring any shares of
Bancshares Stock until Bancshares shall have published results of its
combined operations for a period covering at least 30 days following the
Effective Time.
An Affiliate of Triad, as defined by rules promulgated under the
1933 Act, is a person who directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with Triad. The above restrictions are expected to apply to the
directors and executive officers of Triad (and to any relative or spouse
of any such person or any relative of any such spouse, any of whom live
in the same home as such person, and any trust, estate, corporation or
other entity in which such person has a 10% or greater beneficial or
equity interest), and may apply to any current shareholder of Triad that
owns an amount of stock sufficient to be considered to "control" Triad
or that otherwise is an Affiliate of Triad. Stock transfer instructions
will be given by Bancshares to its stock transfer agent with respect to
the Bancshares Stock to be received by persons deemed by Bancshares to
be subject to these restrictions, and the certificates for such stock
may be appropriately legended.
The Agreement provides that Triad will use its best efforts to
cause each person considered by Bancshares to be an Affiliate of Triad
to deliver to Bancshares a written agreement (an "Affiliate Agreement")
providing that such person will not offer, sell, pledge, transfer or
otherwise dispose of any shares of Bancshares Stock except in compliance
with the restrictions described above. Bancshares' obligation to
consummate the Merger is conditioned on its receipt of the Affiliate
Agreements.
27
<PAGE>
Persons who are or may be Affiliates of Triad should consult with
their own legal counsel regarding the application of the above
restrictions to their Bancshares Stock.
Expenses
The Agreement provides that Triad, Bancshares and UCB each will
pay its own legal, accounting and financial advisory fees and all its
other costs and expenses (including filing fees, printing costs and
travel expenses) incurred or to be incurred in connection with the
performance of its obligations under the Agreement or otherwise in
connection with the Merger. Except under certain circumstances
involving a wrongful termination or breach of the Agreement, the cost of
soliciting proxies will be deemed to be incurred and shall be paid 50%
by Triad and 50% by Bancshares. However, in the event the Agreement is
terminated following a breach or violation of the Agreement by
Bancshares or UCB, then Bancshares or UCB will be obligated to reimburse
Triad for up to $175,000 in the above costs and expenses actually
incurred by Triad. In the event the Agreement in terminated following a
breach or violation of the Agreement by Triad, then Triad will be
obligated to reimburse Bancshares and UCB for up to $100,000 in the
above costs and expenses actually incurred by Bancshares and UCB.
Termination Fee
If the Agreement is terminated because Bancshares or UCB has
entered prior to the date of the Agreement, or terminates this Agreement
in anticipation of entering, into a letter of intent or an agreement
with any individual or entity that provides for such individual or
entity to acquire Bancshares or UCB, merge with Bancshares or UCB where
Bancshares or UCB is not the surviving entity, or purchase all or
substantially all of the assets of Bancshares or UCB or prior to
termination of the Agreement, or Bancshares or UCB engages in
negotiations relating to any such transaction and a letter of intent or
agreement with respect thereto is entered into within 12 months
following the termination of the Agreement, or Bancshares or UCB engages
in an acquisition and the result of engaging in such acquisition is that
any of the conditions set forth in the Agreement shall fail to be
satisfied on or before July 31, 1996 or the Effective Time shall
otherwise not occur on or before July 31, 1996, then Bancshares and UCB
shall pay to Triad a termination fee of $500,000 and reimburse Triad its
expenses incurred as a result of the Agreement. If the Agreement is
terminated because Triad has entered prior to the date of the Agreement,
or terminates the Agreement in anticipation of entering, into a letter
of intent or an agreement with any individual or entity that provides
for such individual or entity to acquire Triad, merge with or into
Triad, or purchase all or substantially all of the assets of Triad, or
prior to the termination of this Agreement, Triad engages in
negotiations relating to any such transaction and a letter of intent or
agreement with respect thereto is entered into within 12 months
following the termination of the Agreement, then Triad shall pay to
Bancshares, or at the election of Bancshares to UCB, a termination fee
of $500,000 and reimburse Bancshares and UCB their expenses incurred as
a result of the Agreement.
28
<PAGE>
RIGHTS OF DISSENTING SHAREHOLDERS
The Merger will give rise to Dissenter's Rights under Article 13
of the North Carolina Business Corporation Act ("Article 13"). Pursuant
to Article 13, any Triad shareholder who objects to the Merger may
exercise Dissenter's Rights and become entitled to be paid the fair
value of such shareholder's shares of Triad Stock if the Merger is
consummated. The following is only a summary of the Dissenter's Rights
of Triad's shareholders. A complete copy of Article 13 is attached
hereto as Appendix B and incorporated by reference into this Prospectus/
Proxy Statement. Any shareholder who intends to exercise Dissenter's
Rights should review the text of Article 13 carefully and comply exactly
with its requirements, and also should consult with his attorney. Except
as provided below, no further notices will be given to shareholders by
Triad regarding the existence of Dissenter's Rights or any time periods
within which those rights must be exercised.
Article 13 provides for a shareholder's Dissenter's Rights and the
detailed procedure for exercising those rights that must be followed by
a dissenting shareholder. In summary, that procedure is described
below.
Any shareholder who desires to assert Dissenter's Rights must (i)
give to Triad, and Triad must actually receive, before the vote on the
Merger is taken, written notice of the shareholder's intent to demand
payment for his shares if the Merger is consummated, and (ii) not vote
his shares in favor of the Merger. Failure by a shareholder to satisfy
both requirements will mean that the shareholder will not be entitled to
assert Dissenter's Rights and obtain payment for his shares under
Article 13. (Shareholders should note that if they sign and return a
blank appointment of proxy with no instructions as to how their shares
should be voted, they will be deemed to have voted in favor of the
Merger and thereafter will not be entitled to assert Dissenter's
Rights.)
If the Agreement is approved by Triad's shareholders at the
Special Meeting (or at any adjournments thereof), then, within 10 days
of the date the Merger is consummated, Triad must send a written notice
(by registered or certified mail, return receipt requested) to each
shareholder who has taken the actions described above and is entitled to
exercise Dissenter's Rights. That notice will:
(a) State where the dissenting shareholder's payment demand must
be sent, and where and when share certificates must be deposited;
(b) Supply a form for demanding payment;
(c) Set a date by which Triad must receive the dissenting
shareholder's payment demand (which may not be fewer than 30 nor more
than 60 days after the date the dissenter's notice is mailed); and,
(d) Be accompanied by a copy of Article 13.
A shareholder who has been sent the dissenter's notice must demand
payment AND must deposit his share certificates by the date set forth in
and in accordance with the terms and conditions of the dissenter's
notice; otherwise, such shareholder will not be entitled to payment for
his shares under Article 13. A shareholder who demands payment and
deposits his share certificates as required retains all other rights as
a shareholder until such rights are cancelled or modified by
consummation of the Merger.
As soon as the Merger is consummated or upon receipt of a payment
demand, Triad will offer to pay each dissenter who timely demanded
payment and deposited his share certificates the amount Triad estimates
to be the fair value of his shares, plus interest accrued to the date of
payment, and will pay this amount to each dissenter who agrees in
writing to accept it in full satisfaction of his demand. Triad's offer
of payment will be accompanied by:
(a) Certain of Triad's most recent available financial statements;
(b) A statement of Triad's estimate of the fair value of the shares;
29
<PAGE>
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment if
dissatisfied with Triad's offer; and,
(e) A copy of Article 13.
If Triad does not consummate the Merger within 60 days after the
date set for demanding payment and depositing share certificates, Triad
must return the deposited certificates, and if, thereafter, the Merger
is consummated, Triad must send a new dissenter's notice and repeat the
payment demand procedure set forth above.
If a dissenter believes that the amount offered by Triad as
described above is less than the fair value of his shares or that the
interest due is incorrectly calculated, or if Triad fails to make
payment to a dissenter who accepts its offer within 30 days after such
acceptance, or if Triad fails to consummate the Merger and does not
return the deposited certificates within 60 days after the date set for
demanding payment, then the dissenter may notify Triad in writing of his
own estimate of the fair value of his shares and the amount of interest
due and may demand payment of his estimate, or may reject Triad's offer
and demand payment of the fair value of his shares and interest due. In
any such event, if a dissenting shareholder fails to take any such
action within the 30-day period, he will be deemed to have waived his
rights under Article 13 and to have withdrawn his dissent and demand for
payment.
If a dissenter has taken all required actions and his demand for
payment remains unsettled, the dissenter may commence a proceeding
within 60 days after the date of his payment demand and petition the
court to determine the fair value of his shares and accrued interest.
Upon service on it of the petition filed with the court, Triad must pay
to the dissenter the amount originally offered by Triad. If the
dissenter does not commence the proceeding within said 60-day period, he
has an additional 30 days to either (i) accept in writing the amount
offered by Triad, upon which acceptance Triad will pay such amount in
full satisfaction of the dissenter's demand, or (ii) withdraw his demand
for payment and resume the status of a nondissenting shareholder. A
dissenter who takes no action within this 30-day period is deemed to
have withdrawn his dissent and demand for payment.
In the court proceeding described above, the court may appoint one
or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value, and has discretion to make all
dissenters whose demands remain unsettled parties to the proceeding.
Each dissenter made a party to the proceeding must be served with a copy
of the petition and is entitled to judgment for the amount, if any, by
which the court finds the fair value of his shares, plus interest, to
exceed the amount paid by Triad. Court costs, appraisal and counsel
fees may be assessed by the court as it deems equitable.
Article 13 contains certain additional provisions with respect to
dissent by nominees who hold shares for others, and by beneficial owners
whose shares are held in the name of other persons, and reference is
made to Appendix B for a more complete description thereof.
30
<PAGE>
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(Unaudited)
The following unaudited pro forma combined condensed balance sheet as of
September 30, 1995, and the unaudited pro forma combined condensed statements of
income for the nine months ended September 30, 1995, and for the years ended
December 31, 1994, 1993, and 1992 combine the historical financial statements of
Bancshares and Triad and are presented under the "pooling-of-interests" method
of accounting for business combinations. The pro forma combined condensed
balance sheet gives effect to the Merger as if the transaction had occurred on
September 30, 1995. The pro forma combined condensed statements of income give
effect to the Merger as if the transaction had occurred at the beginning of each
of the periods presented. The Merger represents a stock exchange whereby Triad
shareholders will receive .56944 shares of Bancshares Stock for each share of
Triad Stock.
The pro forma statements are provided for informational purposes. The
unaudited pro forma financial information presented is not necessarily
indicative of what the actual financial position or results of operations would
have been had the Merger been completed as of September 30, 1995, or as of the
beginning of each of the periods presented and is not indicative of future
financial position or future results. The pro forma financial statements should
be read in conjunction with the audited financial statements and the notes
thereto of Bancshares and Triad and their unaudited interim financial statements
incorporated herein by reference.
<PAGE>
United Carolina Bancshares Corporation and Subsidiaries
Pro Forma Combined Condensed Balance Sheets
At September 30, 1995
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
United
Carolina Triad Pro Forma
Bancshares Bank Adjustments Combined
<S> <C> <C> <C> <C>
Assets
Cash and Due From Banks $ 142,793 $ 15,516 $ $ 158,309
Investment Securities 766,166 45,218 811,384
Federal Funds Sold and Other
Short-Term Investments 111,820 7,220 119,040
Loans, Net of Reserve for Credit Losses 2,595,042 125,590 2,720,632
Premises and Equipment 53,700 3,622 57,322
Other Assets 97,122 2,071 99,193
Total Assets $ 3,766,643 $ 199,237 $ $ 3,965,880
Liabilities
Demand Deposits $ 539,532 $ 45,090 $ $ 584,622
NOW, Money Market, and
Savings Deposits 1,248,235 61,112 1,309,347
Time Deposits 1,610,439 75,097 1,685,536
Total Deposits 3,398,206 181,299 3,579,505
Liabilities for Borrowed Funds 31,533 1,069 32,602
Other Liabilities 44,589 1,902 46,491
Total Other Liabilities 76,122 2,971 79,093
Stockholders' Equity
Capital Stock 59,075 4,547 (405)(1) 63,217
Surplus 42,441 7,525 405(1) 50,371
Retained Earnings 190,045 2,924 192,969
Unrealized Gains (Losses) on
Securities Available for Sale 745 (29) 725
Total Stockholders' Equity 292,315 14,967 307,282
Total Liabilities and Capital $ 3,766,643 $ 199,237 $ $ 3,965,880
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Information.
32
<PAGE>
United Carolina Bancshares Corporation and Subsidiaries
Pro Forma Combined Condensed Statements of Income
For the Nine Months Ended September 30, 1995
(Unaudited)
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
United
Carolina Triad Pro Forma
Bancshares Bank Adjustments Combined
<S> <C> <C> <C> <C>
Interest Income
Loans $ 177,917 $ 8,587 $ $186,504
Federal Funds Sold and Other Short-
Term Investments 4,808 114 4,922
Investment Securities 27,784 1,918 29,702
Total Interest Income 210,509 10,619 221,128
Interest Expense
Deposits 91,137 4,114 95,251
Borrowed Funds 2,218 59 2,277
Total Interest Expense 93,355 4,173 97,528
Net Interest Income Before Provision
for Loan Losses 117,154 6,446 123,600
Provisions for Loan Losses 4,400 125 4,525
Net Interest Income after Provision
for Loan Losses 112,754 6,321 119,075
Other Operating Income 33,355 1,364 34,719
Other Operating Expenses 93,894 6,129 100,023
Net Income Before Income Taxes 52,215 1,556 53,771
Income Taxes 19,027 176 19,203
Net Income $ 33,188 $ 1,380 $ $ 34,568
Earnings Per Share(2) $ 2.25 $ 0.74 $ $ 2.19
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Information
33
<PAGE>
United Carolina Bancshares Corporation and Subsidiaries
Pro Forma Combined Condensed Statements of Income
For the Year Ended December 31, 1994
(Unaudited)
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
United
Carolina Triad Pro Forma
Bancshares Bank Adjustments Combined
<S> <C> <C> <C> <C>
Interest Income
Loans $ 199,988 $ 9,323 $ $ 209,311
Federal Funds Sold and Other Short-
Term Investments 2,283 111 2,394
Investment Securities 29,585 2,406 31,991
Total Interest Income 231,856 11,840 243,696
Interest Expense
Deposits 84,070 4,013 88,083
Borrowed Funds 2,951 81 3,032
Total Interest Expense 87,021 4,094 91,115
Net Interest Income Before Provision
for Loan Losses 144,835 7,746 152,581
Provisions for Loan Losses 3,371 150 3,521
Net Interest Income after Provision
for Loan Losses 141,464 7,596 149,060
Other Operating Income 43,405 1,768 45,173
Other Operating Expenses 137,605 7,851 145,456
Net Income Before Income Taxes 47,264 1,513 48,777
Income Taxes 17,198 343 17,541
Income Before Cumulative Effect of a
Change in Accounting Method 30,066 1,170 31,236
Cumulative Effect of a Change in
Accounting Method (316) (316)
Net Income $ 29,750 $ 1,170 $ $ 30,920
Income Per Share Before Cumulative
Effect of a Change in
Accounting Method $ 2.05 $ 0.65 $ $ 1.99
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Information
34
<PAGE>
United Carolina Bancshares Corporation and Subsidiaries
Pro Forma Combined Condensed Statements of Income
For the Year Ended December 31, 1993
(Unaudited)
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
United
Carolina Triad Pro Forma
Bancshares Bank Adjustments Combined
<S> <C> <C> <C> <C>
Interest Income
Loans $173,128 $4,929 $ $178,057
Federal Funds Sold and Other Short-
Term Investments 2,917 91 3,008
Investment Securities 30,407 1,380 31,787
Total Interest Income 206,452 6,400 212,852
Interest Expense
Deposits 76,747 2,077 78,824
Borrowed Funds 1,954 1 1,955
Total Interest Expense 78,701 2,078 80,779
Net Interest Income Before Provision
for Loan Losses 127,751 4,322 132,073
Provisions for Loan Losses 4,993 225 5,218
Net Interest Income after Provision
for Loan Losses 122,758 4,097 126,855
Other Operating Income 41,671 1,093 42,764
Other Operating Expenses 115,970 4,614 120,584
Net Income Before Income Taxes 48,459 576 49,035
Income Taxes 15,842 147 15,989
Income Before Cumulative Effect of a
Change in Accounting Method 32,617 429 33,046
Cumulative Effect of a Change in
Accounting Method 855 175 1,030
Net Income $ 33,472 $ 604 $ $ 34,076
Income Per Share Before Cumulative
Effect of a Change in
Accounting Method $ 2.23 $ 0.44 $ $ 2.18
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Information
35
<PAGE>
United Carolina Bancshares Corporation and Subsidiaries
Pro Forma Combined Condensed Statements of Income
For the Year Ended December 31, 1992
(Unaudited)
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
United
Carolina Triad Pro Forma
Bancshares Bank Adjustments Combined
<S> <C> <C> <C> <C>
Interest Income
Loans $171,834 $5,469 $ $177,303
Federal Funds Sold and Other Short-
Term Investments 5,112 110 5,222
Investment Securities 34,849 1,111 35,960
Total Interest Income 211,795 6,690 218,485
Interest Expense
Deposits 89,147 2,570 91,717
Borrowed Funds 2,658 13 2,671
Total Interest Expense 91,805 2,583 94,388
Net Interest Income Before Provision
for Loan Losses 119,990 4,107 124,097
Provisions for Loan Losses 11,920 526 12,446
Net Interest Income after Provision
for Loan Losses 108,070 3,581 111,651
Other Operating Income 38,982 1,143 40,125
Other Operating Expenses 105,655 4,501 110,156
Net Income Before Income Taxes 41,397 223 41,620
Income Taxes 12,968 41 13,009
Income Before Cumulative Effect of a
Change in Accounting Method 28,429 182 28,611
Cumulative Effect of a Change in
Accounting Method 41 41
Net Income $ 28,429 $ 223 $ $ 28,652
Income Per Share Before Cumulative
Effect of a Change in
Accounting Method $ 1.96 $ 0.19 $ $ 1.90
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Information
36
<PAGE>
Notes to Pro Forma Combined Condensed Financial Information
(Unaudited)
(1) Adjustment based on an exchange ratio of .569444 for the conversion of
Triad Stock to Bancshares Stock. At September 30, 1995, Triad had 1,818,623
shares outstanding.
(2) Except for the nine month period ended September 30, 1995, the dilutive
effect of common stock equivalents had an immaterial effect on earnings per
share for Triad. For the nine months ended September 30, 1995, the earnings
per share amount reflects fully diluted earnings per share. For all periods
presented, the dilutive effect of common stock equivalents had an
immaterial effect on earnings per share of Bancshares on an historical and
pro forma combined basis.
37
<PAGE>
MARKET AND DIVIDEND INFORMATION REGARDING
TRIAD STOCK AND BANCSHARES STOCK
On September 30, 1995, there were 1,818,623 outstanding
shares of Triad Stock held by an aggregate of approximately 1,400
shareholders of record. There is no established market in which the
Triad Stock is regularly traded nor any uniformly quoted price for
Triad Stock. To the knowledge of management of Triad, the last trade
price of Triad Stock prior to the date the Merger was publicly
announced was $15.25. The last trade price of Triad Stock known to
management of Triad prior to January ___, 1996, was $______.
The following table presents the high and low sales price
for the Triad Stock known to management of Triad for the periods
indicated and the amounts of cash dividends declared, with respect to
the Triad Stock for each quarterly period since January 1, 1993. (See
"CAPITAL STOCK OF BANCSHARES AND TRIAD.")
<TABLE>
<CAPTION>
High Low Cash dividend
Year Quarterly period price price declared
<S> <C> <C> <C> <C>
1996 First quarter (through January __, 1996) . $ $ None
1995 Fourth quarter . . . . . . . . . . . . . . None
Third quarter . . . . . . . . . . . . . . . 15.75 10.25 None
Second quarter . . . . . . . . . . . . . . . 10.25 9.25 None
First quarter . . . . . . . . . . . . . . . 10.25 8.75 None
1994 Fourth quarter . . . . . . . . . . . . . . . 12.00 9.25 None
Third quarter . . . . . . . . . . . . . . . 9.00 8.00 None
Second quarter . . . . . . . . . . . . . . . 7.50 7.00 None
First quarter . . . . . . . . . . . . . . . 6.50 6.50 None
1993 Fourth quarter . . . . . . . . . . . . . . . 6.50 6.25 None
Third quarter . . . . . . . . . . . . . . . 6.25 6.00 None
Second quarter . . . . . . . . . . . . . . . 6.75 5.00 None
First quarter . . . . . . . . . . . . . . . 5.50 4.50 None
</TABLE>
The outstanding shares of Bancshares Stock are held by an
aggregate of approximately 7,800 shareholders of record. Bancshares
Stock is traded in the over-the-counter market and is listed on the
Nasdaq National Market. On October 18, 1995, the last trading day
before public announcement of the Merger, the last sale price of
Bancshares Stock on the Nasdaq National Market was $36.25. On
January ___, 1996, the last reported sale price for Bancshares Stock on
the Nasdaq National Market was $______. The following table lists the
high and low closing prices as reported by Nasdaq, and the amounts
of cash dividends declared, with respect to Bancshares Stock for each
quarterly period since January 1, 1993. (See "CAPITAL STOCK OF
BANCSHARES AND TRIAD.")
<TABLE>
<CAPTION>
High Low Cash
closing closing dividend
Year Quarterly period price price declared
<S> <C> <C> <C> <C>
1996 First quarter (through January __, 1996) $ $ $
1995 Fourth quarter . . . . . . . . . . . . . .
Third quarter . . . . . . . . . . . . . . 36.75 30.25 0.25
Second quarter . . . . . . . . . . . . . . 31.00 29.00 0.25
First quarter . . . . . . . . . . . . . . 31.00 24.25 0.22
1994 Fourth quarter . . . . . . . . . . . . . . 27.25 23.00 0.22
Third quarter . . . . . . . . . . . . . . 27.75 23.00 0.22
Second quarter . . . . . . . . . . . . . . 23.75 20.50 0.20
First quarter . . . . . . . . . . . . . . 22.75 21.00 0.20
1993 Fourth quarter . . . . . . . . . . . . . . 25.75 21.50 0.20
Third quarter . . . . . . . . . . . . . . 25.75 22.00 0.20
Second quarter . . . . . . . . . . . . . . 23.75 20.25 0.18
First quarter . . . . . . . . . . . . . . 23.75 19.75 0.18
</TABLE>
38
<PAGE>
CAPITALIZATION
The following table sets forth (i) the unaudited historical
capitalization of Bancshares as of September 30, 1995, (ii) the
unaudited historical capitalization of Triad as of September 30, 1995,
and (iii) the unaudited pro forma capitalization of Bancshares at
September 30, 1995, assuming the Merger had been consummated as of that
date (and with no shareholder of Triad exercising Dissenter's Rights).
This financial information is based on and should be read in
conjunction with Bancshares' and Triad's interim unaudited financial
statements, including the related notes thereto, which are
incorporated herein by reference. In addition, the following information
does not include the effects of a recently announced merger by Bancshares
which is not considered to be material. (See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE", "UNITED CAROLINA BANCSHARES CORPORATION AND
UNITED CAROLINA BANK - Recent Events" and "FINANCIAL STATEMENTS OF TRIAD
BANK.")
<TABLE>
<CAPTION>
At September 30, 1995
Bancshares Triad Proforma
(actual) (actual) combined (1)
(In thousands)
<S> <C> <C> <C>
Common stock:
Par value $4 per share: 40,000,000 shares
authorized, 14,768,740 shares issued . . . . $ 59,075 $ $ 63,217
Par value $2.50 per share: 4,000,000 shares
authorized, 1,818,623 shares issued . . . . . 4,547
Preferred Stock:
Par value $10 per share: 2,000,000 shares
authorized, no shares issued . . . . . . . . - _
None authorized . . . . . . . . . . . . . . . . _
Surplus . . . . . . . . . . . . . . . . . . . . . . 42,441 7,525 50,371
Retained earnings . . . . . . . . . . . . . . . . 190,045 2,924 192,969
Unrealized gains (losses) on securities
available for sale, net of deferred income taxes 754 (29) 725
Total shareholders' equity . . . . . . . . . . . $292,315 $ 14,967 $ 307,282
</TABLE>
(1) Assumes the Merger became effective at September 30, 1995, and
that all shares of Triad Stock outstanding on that date were
converted into 1,035,603 shares of Bancshares Stock at the
Exchange Rate of 0.569444.
UNITED CAROLINA BANCSHARES CORPORATION AND UNITED CAROLINA BANK
General
Bancshares is a North Carolina business corporation
organized in 1970 and which is registered with the Federal Reserve as
a bank holding company. Bancshares' principal business is
providing banking and other financial services through its two
wholly-owned bank subsidiaries, UCB and United Carolina Bank of South
Carolina ("UCBSC"). UCB is a North Carolina banking corporation
which has its principal offices in Whiteville, North Carolina, and
operates 126 banking offices in 29 counties in the southeastern and
south central regions of North Carolina. UCBSC is a South Carolina
banking corporation which has its principal offices in Greer, South
Carolina, and operates 14 banking offices located in three
counties in the northwestern and eastern regions of South Carolina.
Bancshares' and UCB's principal offices are located at 127 West
Webster Street, Whiteville, North Carolina.
39
<PAGE>
Recent Events
On September 19, 1995, Bancshares and UCB announced that UCB
had entered into a definitive agreement with Seaboard Savings Bank,
Inc., SSB, Plymouth, North Carolina ("Seaboard"), pursuant to which
Seaboard will merge with and into UCB. Terms of UCB's agreement
with Seaboard provide for Bancshares to exchange 0.9104 shares of
Bancshares Stock for each of Seaboard's outstanding shares of
common stock (305,647 shares outstanding at September 30, 1995),
subject to adjustment. At September 30, 1995 Seaboard reported
$47.7 million in total assets, $36.9 million in loans, and $40.3
million in total deposits, and had common shareholders equity totaling
$6.0 million. Seaboard owns and operates its main office in
Plymouth, North Carolina and one branch in each of Columbia and
Williamston, North Carolina. Subject to required regulatory approvals
and the approval of Seaboard's shareholders, it currently is expected
that Seaboard will be merged into UCB during the first calendar quarter
of 1996.
Beneficial Ownership of Securities
The following table gives the number of shares and
percentage of the outstanding Bancshares Stock beneficially owned as
of September 30, 1995, by each of Bancshares' directors and certain
of its executive officers individually, and by all Bancshares' directors
and executive officers as a group:
<TABLE>
<CAPTION>
Name of Amount and nature of Percent of
beneficial owner beneficial ownership (1) class
<S> <C> <C>
Directors:
J. W. Adams . . . . . . . . . . . . . . 44,040 (2) .30 %
John V. Andrews . . . . . . . . . . . . 7,118 .05 %
Russell M. Carter . . . . . . . . . . . 4,000 .03 %
W. E. Carter . . . . . . . . . . . . . . 54,771 .37 %
Alfred E. Cleveland . . . . . . . . . . 15,650 .11 %
James L. Cresimore . . . . . . . . . . . 23,584 .16 %
Thomas P. Dillon . . . . . . . . . . . . 6,377 .04 %
C. Frank Griffin . . . . . . . . . . . . 20,508 .14 %
James C. High . . . . . . . . . . . . . 8,987 .06 %
E. Rhone Sasser . . . . . . . . . . . . 74,156 .50 %
Jack E. Shaw . . . . . . . . . . . . . . 202,885 (3) 1.37 %
Harold B. Wells . . . . . . . . . . . . 62,725 .42 %
Charles M. Winston . . . . . . . . . . . 16,449 .11 %
Certain non-director executive officers:
Kenneth L. Miller, Jr. . . . . . . . . . 10,816 .07 %
Jeff D. Etheridge, Jr. . . . . . . . . . 46,382 .31 %
Ronald C. Monger . . . . . . . . . . . . 15,587 .10 %
David L. Thomas . . . . . . . . . . . . 20,667 .14 %
All Bancshares' directors
and executive officers
as a group (22 persons): . . . . . . . . 702,246 4.75 %
</TABLE>
(1) Except as otherwise noted, and to the best knowledge of
management of Bancshares, each individual and the group has
sole voting and investment power with respect to all shares
beneficially owned. The named individuals and group have
shared voting and investment power as to the following numbers
of shares: Mr. Carter - 27,905 shares; Mr. Cleveland -
496 shares; Mr. Cresimore -46 shares; Mr. High - 85 shares;
Mr. Sasser - 417 shares; Mr. Shaw - 34,990 shares; Mr. Wells -
7,353 shares; Mr. Monger - 500
40
<PAGE>
shares; all directors and executive officers as a group -
78,035 shares. The named individuals and group have shared
voting power only as to the following numbers of shares held in
trust for their respective accounts pursuant to the terms
of Bancshares' 401(k) Savings Plan. Mr. Sasser - 27,292
shares; Mr. Miller - 8,158 shares; Mr. Etheridge - 12,213
shares; Mr. Monger - 10,087 shares; Mr. Thomas -10,772
shares; all directors and executive officers as a group -
110,856 shares.
(2) Includes 9,935 shares held in trust for Mr. Adams and his
children. Mr. Adams has no voting or investment power with
respect to those shares.
(3) Does not include 13,500 shares held of record by Mr. Shaw's
spouse and 186 shares held of record by Mr. Shaw's daughter.
Mr. Shaw disclaims any beneficial ownership of those shares.
TRIAD BANK
General
Triad is a North Carolina commercial bank which was
organized in 1982 with two branches located in Greensboro. By
mid-1993, Triad had grown to seven branches in Greensboro and
Winston-Salem. In December 1993, BTNC Corporation and its wholly owned
subsidiary, Bankers Trust of North Carolina, merged with and into Triad
adding two branches in Greensboro and one branch in Asheboro. Triad
opened a new branch in Greensboro in May 1994. Triad also has a loan
production office in each of Kernersville and Burlington, North
Carolina.
Triad is a community-oriented financial institution which
offers a variety of financial services to meet the needs of the
communities it serves and which is primarily engaged in the business of
taking deposits and making loans. Triad's principal lending
activity is making commercial and consumer loans in Triad's market area.
However, Triad also offers other types of loans, including, without
limitation, home equity loans (predominantly second mortgage loans
secured by the equity in the home), multi-family residential mortgage
loans, construction/permanent loans, and commercial real estate
loans. Triad's primary source of revenue is interest income from
its lending activities and, to a lesser extent, from its
investment portfolio.
Beneficial Ownership of Securities
As of September 30, 1995, no shareholder known to management
of Triad beneficially owned more than 5% of the outstanding shares of
Triad Stock. As of the September 30, 1995, the beneficial ownership of
Triad Stock by directors and by directors and executive officers as a
group, was as follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF OF BENEFICIAL OWNERSHIP PERCENT OF
BENEFICIAL OWNER OF STOCK (1) CLASS (2)
<S> <C> <C>
H. Frank Auman, Jr. 65,775(3) 3.62%
Carl I. Carlson, III 31,140(4) 1.70%
Stephen C. Carlson 16,648(5) 0.92%
Bobby R. Curtis 840(6) 0.05%
Michael A. Falk 21,776(7) 1.20%
Ronald L. Garber, M.D. 9,037(8) 0.50%
Kenneth M. Greene 1,680(9) 0.09%
Rachel S. Hull 15,647(10) 0.86%
James A. King, Jr. 8,112(11) 0.45%
Jerry W. Lawson 6,746(12) 0.37%
Larry C. Lewis 39,673(13) 2.18%
Ted Y. Matney 53,481(14) 2.91%
David C. Millikan 7,930(15) 0.44%
41
<PAGE>
AMOUNT AND NATURE
NAME OF OF BENEFICIAL OWNERSHIP PERCENT OF
BENEFICIAL OWNER OF STOCK (1) CLASS (2)
James E. Mims 30,944(16) 1.17%
James S. Schenck, III 8,060(17) 0.44%
William E. Stanley, Jr. 88,388(18) 4.85%
Dwight D. Stone 5,554(19) 0.31%
Priscilla P. Taylor, PhD. 570(20) 0.03%
T. Talmage Timberlake 23,101(21) 1.27%
All Executive Officers and
Directors as a Group (28 persons) 473,028(22) 24.55%
</TABLE>
________________________
(1) Except as otherwise noted, to the best knowledge of
management of Triad the above individuals and group exercise
sole voting and investment power with respect to all shares
shown as beneficially owned.
(2) The calculations of the percentage of class beneficially owned
by each individual and by the group as a whole are based, in
each case, on a number of total outstanding shares equal
to 1,818,623 shares currently outstanding plus the number of
shares capable of being issued to that individual (if any) and
to the group, respectively, as a whole within 60 days after
September 30, 1995 upon the exercise of stock options held by each of
them (if any) and by the group, respectively.
(3) Mr. Auman exercises sole voting and investment power with
respect to 65,145 shares and sole investment power with respect
to the 630 shares for which he holds exercisable options.
(4) Mr. Carl I. Carlson, III exercises sole voting and
investment power with respect to 2,830 shares, shared voting and
investment power with respect to 9,808 shares, and sole
investment power with respect to 18,502 shares for which he
holds exercisable options.
(5) Mr. Stephen C. Carlson exercises sole voting and investment
power with respect to 14,069 shares, and sole investment power
only with respect to 315 shares for which he holds exercisable
options.
(6) Mr. Curtis exercises sole voting and investment power with
respect to 210 shares and sole investment power only with
respect to 630 shares for which he holds exercisable options.
(7) Mr. Falk exercises sole voting and investment power with
respect to 17,996 shares, and sole investment power only with
respect to the 3,780 shares for which he holds exercisable
options.
(8) Dr. Garber exercises sole voting and investment power
with respect to 2,448 shares, shared voting and investment
power with respect to 3,439 shares, and sole investment
power only with respect to the 3,150 shares for which he holds
exercisable options.
(9) Mr. Greene exercises sole voting and investment power with
respect to 1,050 shares and sole investment power only with
respect to 630 shares for which he holds exercisable options.
(10) Ms. Hull exercises sole voting and investment power with
respect to 10,833 shares, shared voting and investment power
with respect to 4,184 shares and sole investment power only
with respect to 630 shares for which she holds exercisable
options.
(11) Mr. King exercises sole voting and investment power with
respect to 4,090 shares, shared voting and investment power
with respect to 242 shares, and sole investment power only with
respect to 3,780 shares for which he holds exercisable options.
(12) Mr. Lawson exercises sole voting and investment power with
respect to 2,966 shares, and sole investment power only with respect
to 3,780 shares for which he holds exercisable options.
(13) Mr. Lewis exercises sole voting and investment power with
respect to 27,282 shares, shared voting and investment power with
respect to 11,761 shares, and sole investment power only with
respect to 630 shares for which he holds exercisable options.
42
<PAGE>
(14) Mr. Matney exercises sole voting and investment power
with respect to 15,363 shares, shared voting and investment
power with respect to 16,136 shares, and sole investment power
only with respect to 21,982 shares for which he holds
exercisable options.
(15) Mr. Millikan exercises sole voting and investment power
with respect to 7,300 shares and sole investment power only with
respect to 315 shares for which he holds exercisable options.
(16) Mr. Mims exercises sole voting and investment power with
respect to 12,158 shares, and sole investment power only with
respect to 18,786 shares for which he holds exercisable options.
(17) Mr. Schenck exercises sole voting and investment power
with respect to 5,192 shares, shared voting and investment power
with respect to 2,238 shares, and sole investment power only
with respect to 630 shares for which he holds exercisable
options.
(18) Mr. Stanley exercises sole voting and investment power
with respect to 84,608 shares, and sole investment power
only with respect to 3,780 shares for which he holds exercisable
options.
(19) Mr. Stone exercises sole voting and investment power with
respect to 4,924 shares and sole investment power only with
respect to 630 shares for which he holds exercisable options.
(20) Ms. Taylor exercises sole voting and investment power with
respect to 255 shares, and sole investment power only with
respect to 315 shares for which she holds exercisable options.
(21) Mr. Timberlake exercises sole voting and investment power
with respect to 12,006 shares, shared voting and investment
power with respect to 9,940 shares, and sole investment power
only with respect to 1,155 shares for which he holds exercisable
options.
(22) Includes a total of 306,593 shares as to which the persons
included in the group exercise sole voting and investment power
and 105,796 shares as to which voting and investment power is
shared. Also includes 107,993 shares for which the group
holds options to purchase which are capable of being exercised
within 60 days of September 30, 1995 as to which such individuals
have sole investment power only. The 2,264 shares held in trust for
Carl I. Carlson, III and Stephen C. Carlson are included in the
beneficial ownership of Carl I. Carlson, III and Stephen C. Carlson,
as beneficiaries under a trust, and are reflected
separately in the beneficial ownership of each such individual,
but are included only once in the beneficial ownership of the
group.
REGULATION AND SUPERVISION
Federal and state legislation and regulation have
significantly affected the operations of financial institutions in
the past several years and have increased competition among commercial
banks, savings institutions and other providers of financial services.
In addition, federal legislation has imposed new limitations on the
investment authority of, and higher insurance and examination
assessments on, financial institutions and has made other changes that
may adversely affect the future operations and competitiveness of
regulated financial institutions with other financial intermediaries.
The operations of regulated depository institutions and their holding
companies, including Bancshares and its depository institution
subsidiaries, will continue to be subject to changes in applicable
statutes and regulations from time to time.
Bancshares. Bancshares is a bank holding company registered
under the Bank Holding Company Act of 1956, as amended (the "BHCA") and
is subject to the regulations of the Federal Reserve. Under the BHCA,
Bancshares' activities and those of its subsidiaries are limited
to banking, managing or controlling banks, furnishing services to or
performing services for its subsidiaries or engaging in any other
activity which the Federal Reserve determines to be so closely related
to banking or managing or controlling banks as to be a proper incident
thereto.
The BHCA prohibits Bancshares from acquiring direct or
indirect control of more than 5% of the outstanding voting stock or
substantially all of the assets of any bank or savings bank or merging
or consolidating with another bank holding company or savings bank
holding company without prior approval of the Federal Reserve. (See
"PROPOSAL 1: THE MERGER - Required Regulatory Approvals.") Congress
has approved legislation which permits adequately capitalized and
managed bank holding companies to acquire control of a bank in any state
(the "Interstate Banking Law"). Existing state laws setting minimum
age restrictions on target banks can be retained, so long as the age
requirement does not exceed five years. Acquisitions will be subject
to anti-trust provisions that cap at 10% the portion of the United
States' bank deposits a single bank holding company may control, and cap
at 30% the portion of a state's deposits a single bank holding company may
control. States have the authority to waive the 30% cap.
43
<PAGE>
Under the Interstate Banking Law, beginning on June 1, 1997,
banks also will be permitted to merge with one another across state
lines, subject to concentration, capital and Community
Reinvestment Act requirements and regulatory approval. A state can
authorize mergers earlier than June 1, 1997, or it can opt out of
interstate branching by enacting legislation before June 1, 1997.
Effective with the date of enactment, a state can also choose to permit
out-of-state banks to open new branches within its borders. In
addition, if a state chooses to allow interstate acquisition of
branches, then an out-of-state bank also may acquire branches by merger.
Interstate branches that primarily siphon off deposits
without servicing a community's credit needs will be prohibited. If
loans are less than 50% of the average of all institutions in the state,
the branch will be reviewed to see if it is meeting the community
credit needs. If it is not, the branch may be closed and the bank may
be restricted from opening a new branch in the state.
The Interstate Banking Law also modifies the
controversial safety and soundness provisions contained in Section 39
of the 1991 Banking Law described below which required the banking
regulatory agencies to write regulations governing such matters as
internal controls, loan documentation, credit underwriting, interest
rate exposure, asset growth, compensation and fees and whatever else
those agencies determined to be appropriate. The legislation exempts
bank holding companies from these provisions and requires the agencies
to write guidelines, as opposed to regulations, dealing with these
areas. It also gives more discretion to the banking regulatory agencies
with regard to prescribing standards for banks' asset quality, earnings
and stock valuation.
The Interstate Banking Law also expands current exemptions
from the requirement that banks be examined on a 12-month cycle.
Exempted banks will be inspected every 18 months. Other provisions
address paperwork reduction and regulatory improvements, small business
and commercial real estate loan securitization, truth-in-lending
amendments on high cost mortgages, strengthening of the independence
of certain financial regulatory agencies, money laundering, flood
insurance reform and extension of certain statutes of limitations.
At this time, Bancshares is unable to predict how the Interstate Banking
Law may affect its operations.
Additionally, the BHCA prohibits Bancshares from engaging in,
or acquiring ownership or control of more than 5% of the outstanding
voting stock of any company engaged in a non-banking business, including
thrifts, unless such business is determined by the Federal Reserve to
be so closely related to banking as to be properly incident thereto. The
BHCA generally does not place territorial restrictions on the activities
of such non-banking related activities.
Federal Reserve approval (or, in certain cases,
non-disapproval) also must be obtained prior to any person acquiring
control of Bancshares or one of its depository institution
subsidiaries. Control is conclusively presumed to exist if, among
other things, a person acquires more than 25% of any class of voting
stock of the institution or holding company or controls in any
manner the election of a majority of the directors of the institution
or the holding company. Control is presumed to exist if a person
acquires more than 10% of any class of voting stock and the institution
or the holding company has registered securities under Section 12 of the
1934 Act or the acquiror will be the largest shareholder after the
acquisition.
There are a number of obligations and
restrictions imposed on bank holding companies and their insured
depository institution subsidiaries by law and regulatory policies
that are designed to minimize potential loss to depositors of such
depository institutions and the FDIC insurance funds in the event
the depository institution becomes in danger of default or in default.
For example, under the Federal Deposit Insurance Corporation Improvement
Act of 1991 (the "1991 Banking Law"), to reduce the likelihood of
receivership of an insured depository institution subsidiary, a bank
holding company is required to guarantee the compliance of any insured
depository institution subsidiary that may become "undercapitalized"
with the terms of any capital restoration plan filed by such subsidiary
with its appropriate federal banking agency up to the lesser
of (i) an amount equal to 5% of the institution's total assets at the
time the institution became undercapitalized or (ii) the amount which is
necessary (or would have been necessary) to bring the institution
into compliance with all acceptable capital standards as of the time
the institution fails to comply with such capital restoration plan.
Under a policy of the Federal Reserve with respect to bank holding
company operations, a bank holding company is required to serve as a
source of financial strength to its depository institution
subsidiaries and to commit resources to support such institutions
in circumstances where it might not do so absent such policy. Under
the BHCA, the Federal Reserve also has the authority to require a bank
holding company to terminate any activity or to relinquish control of a
nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the
Federal Reserve's determination that such activity or control constitutes a
serious risk to the financial soundness and stability of any depository
institution subsidiary of the bank holding company.
44
<PAGE>
In addition, the "cross-guarantee" provisions of the Federal
Deposit Insurance Act ("FDIA") require insured depository institutions
under common control to reimburse the FDIC for any loss suffered by
either the SAIF or the Bank Insurance Fund ("BIF") of the FDIC as
a result of the default of a commonly controlled insured depository
institution or for any assistance provided by the FDIC to a
commonly controlled insured depository institution in danger of
default. The FDIC may decline to enforce the cross-guarantee provisions
if it determines that a waiver is in the best interest of the SAIF or
the BIF or both. The FDIC's claim is superior to claims of shareholders
of the insured depository institution or its holding company but
subordinate to claims of depositors, secured creditors and holders of
subordinated debt (other than affiliates) of the commonly controlled
insured depository institutions.
Bancshares is subject to the obligations and restrictions
described above, and its depository institution subsidiaries are
subject to the cross-guarantee provisions of the FDIC. However,
management of Bancshares currently does not expect that any of these
provisions will have an impact on the operations of Bancshares or its
subsidiaries.
Bank holding companies are required to comply with the Federal
Reserve's risk-based capital guidelines which require a minimum ratio
of total capital to risk-weighted assets (including certain off-balance
sheet activities, such as standby letters of credit) of 8%. At
least half of the total capital is required to be "Tier I capital,"
principally consisting of common shareholders' equity, noncumulative
perpetual preferred stock, and a limited amount of cumulative perpetual
preferred stock, less certain goodwill items. The remainder ("Tier II
capital") may consist of a limited amount of subordinated debt,
certain hybrid capital instruments and other debt securities, perpetual
preferred stock, and a limited amount of the general loan loss
allowance. In addition to the risk-based capital guidelines, the
Federal Reserve has adopted a minimum leverage capital ratio, under
which a bank holding company must maintain a minimum level of Tier I
capital to average total consolidated assets of at least 3% in the case
of a bank holding company which has the highest regulatory
examination rating and is not contemplating significant growth or
expansion. All other bank holding companies are expected to maintain
a leverage capital ratio of at least 1% to 2% above the stated minimum.
The following table sets forth Bancshares' regulatory
capital position at September 30, 1995. (For the regulatory capital
positions of Bancshares' depository institution subsidiaries as of
September 30, 1995, see the discussions below).
<TABLE>
<CAPTION>
Risk-Based Capital
Leverage Capital Tier I Tier II
% of % of % of
Amount Assets Amount Assets Amount Assets
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Actual . . . . . . . . $274,228 7.35% $274,228 10.53% $306,776 11.78%
Minimum capital
standard . . . . . . 78,116 3.00 104,155 4.00 208,310 8.00
Excess of actual
regulatory capital over
minimum regulatory
capital standard . . . $196,112 4.35% $170,073 6.53% $ 98,466 3.78%
</TABLE>
Under current federal law, transactions between depository
institutions and any affiliate are governed by Section 23A and 23B of
the Federal Reserve Act. An affiliate of a depository institution is
any company or entity that controls, is controlled by or is under
common control with the institution. In a holding company context, the
parent holding company of a depository institution and any
companies which are controlled by such parent holding company are
affiliates of the depository institution. Generally, Sections 23A and
23B (i) limit the extent to which the depository institution or its
subsidiaries may engage in "covered transactions" with any one
affiliate to an amount equal to 10% of such institution's capital
stock and surplus, and contain an aggregate limit on all such
transactions with all affiliates to an amount equal to 20% of such
capital stock and surplus and (ii) require that all such transactions
be on terms substantially the same, or at least as favorable, to the
institution or the subsidiary as those provided to a nonaffiliate. The
term "covered transaction" includes the making of loans or other
extensions of credit to an affiliate, the purchase of assets
from an affiliate, the purchase of, or an investment in, the securities
of an affiliate, the acceptance of securities of an affiliate as
collateral for a loan or extension of credit to any person, or
issuance of a guarantee, acceptance or letter of credit on behalf of
an affiliate. In addition to the restrictions imposed by Sections
23A and 23B, no depository institution may (i) loan or otherwise extend
credit to an affiliate, except for any affiliate which engages only in
activities that are permissible for bank holding companies, or (ii)
purchase or invest in any stocks, bonds, debentures, notes or similar
obligations of any affiliate, except for affiliates that are subsidiaries of
the institution.
45
<PAGE>
Additionally, the FDIC has adopted regulations that affect
contracts between a bank holding company or its non-depository
subsidiaries or related interests under common control, and the
holding company's insured depository institution affiliates. Certain
types of contracts between an insured depository institution and any
company which directly or indirectly controls it (or which is under
common control with it) could be considered unsafe and unsound,
including those relating to: (i) making or purchasing loans, (ii)
servicing loans, (iii) performing trust functions, (iv) providing
bookkeeping or data processing services, (v) furnishing
management services, (vi) selling or transferring any department or
subsidiary, (vii) payments for intangible assets, (viii) transferring
any asset for less than fair market value as evidenced by an
independent written appraisal, or (ix) prepaying any liability more than
30 days prior to its due date. The FDIC also has proposed
regulations which would prohibit any insured depository institution
from entering into any contract with any person to provide goods,
products or services if such contract is determined to adversely affect
the safety or soundness of the insured institution.
Section 4(i) of the BHCA authorizes the Federal Reserve to
approve the application of a bank holding company to acquire any
savings institution under Section 4(c)(8) of the BHCA. In approving
such an application, the Federal Reserve is precluded from imposing any
restrictions on transactions between the bank holding company and the
acquired savings institution, except as required by Section 23A or 23B
of the Federal Reserve Act or any other applicable law. Further, the
FDIA, as amended by the 1991 Banking Law, authorizes the merger or
consolidation of any BIF member with any SAIF member, the assumption
of any liability by any BIF member to pay any deposits of any SAIF
member or vice versa, or the transfer of any assets of any BIF
member to any SAIF member in consideration for the assumption of
liabilities of such BIF member or vice versa, provided that
certain conditions are met and, in the case of any acquiring, assuming
or resulting depository institution which is a BIF member, such
institution continues to make payment of SAIF assessments on the
portion of liabilities attributable to any acquired, assumed or merged
SAIF-insured institution.
As a result of its ownership of a North Carolina-chartered
commercial bank, Bancshares is registered under the bank holding
company laws of North Carolina. Accordingly, Bancshares and UCB are
subject to regulation by the Commissioner. The Commissioner has
asserted authority to examine North Carolina bank holding companies and
their affiliates and is in the process of formulating regulations in
this area.
UCB. UCB is organized as a North Carolina commercial bank
and is subject to various statutory requirements and to rules and
regulations promulgated and enforced by the Commissioner and the FDIC.
Its deposits are insured by the BIF, but a small portion of UCB's
deposits are SAIF-insured as a result of an earlier acquisition of a
thrift institution. Upon consummation of the Merger, the portion of
UCB's deposits attributable to Triad will be BIF-insured.
North Carolina commercial banks, such as UCB, are subject to
legal limitations on the amounts of dividends they are permitted to
pay. Prior approval of the Commissioner is required if the total of all
dividends declared by UCB in any calendar year exceeds its net profits
(as defined by statute) for that year combined with its retained net
profits (as defined by statute) for the preceding two calendar years,
less any required transfers to surplus. Also, under the 1991 Banking
Law an insured depository institution, such as UCB, is prohibited
from making capital distributions, including the payment of
dividends, if, after making such distribution, the institution would
become "undercapitalized" (as such term is defined in the statute).
Based on its current financial condition, Bancshares does not expect
that this provision will have any impact on UCB's ability to pay
dividends.
As an FDIC-insured commercial bank which is not a member of
the Federal Reserve System, UCB is subject to capital requirements
imposed by the FDIC. Under the FDIC's regulations, state nonmember
banks that (a) receive the highest rating during the examination
process and (b) are not anticipating or experiencing any significant
growth, are required to maintain a minimum leverage ratio of 3% of Tier
I capital to average total consolidated assets. All other banks are
required to maintain a minimum ratio of 1% or 2% above the stated
minimum, with a minimum leverage ratio of not less than 4%.
46
<PAGE>
The following table sets forth UCB's regulatory capital positions
at September 30, 1995:
<TABLE>
<CAPTION>
Risk-Based Capital
Leverage Capital Tier I Tier II
% of % of % of
Amount Assets Amount Assets Amount Assets
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Actual . . . . . . . . $222,547 6.61% $222,547 9.38% $252,215 10.63%
Minimum capital
standard . . . . . . 71,203 3.00 94,937 4.00 189,875 8.00
Excess of actual
regulatory capital over
minimum regulatory
capital standard. . . $151,344 3.61% $127,610 5.3% $ 62,340 2.63%
</TABLE>
UCB also is subject to insurance assessments imposed by the
FDIC. Under current law, as amended by the 1991 Banking Law, the
insurance assessment to be paid by BIF-insured institutions shall be
as specified in a schedule required to be issued by the FDIC that
would specify, at semiannual intervals, target reserve ratios designed
to increase the reserve ratio to 1.25% of estimated insured deposits
(or such higher ratio as the FDIC may determine in accordance with the
statute) in 15 years. Further, the FDIC is authorized, under the 1991
Banking Law, to impose one or more special assessments in any amount
deemed necessary to enable repayment of amounts borrowed by the FDIC
from the United States Treasury Department. Effective January 1, 1993,
the FDIC replaced the uniform assessment rate with a transitional
risk-based assessment schedule which became fully effective in January
1994, having assessments ranging from 0.23% to 0.31 % of an
institution's average assessment base. Effective July 1, 1995, the
FDIC reduced assessments to 0.04% for the strongest banks, but
left unchanged the 0.31% assessment rate for the weakest
banks. On November 14, 1995, the FDIC again reduced assessments
(effective January 1, 1996) from a range of 0.04% to 0.31% to a range
of 0% to 0.27%. This reduction was a result of the BIF's reserve ratio
being over 1.30%. These recent premium reductions do not affect the
deposit premiums paid on SAIF-insured deposits. The actual assessment
to be paid by each BIF member is based on an institution's assessment
risk classification, which is determined based on whether the
institution is considered "well capitalized," "adequately capitalized"
or "under capitalized," as such terms have been defined in applicable
federal regulations adopted to implement the prompt corrective action
provisions of the 1991 Banking Law, and whether such institution is
considered by its supervisory agency to be financially sound or to
have supervisory concerns. (See "- Impact of the 1991 Banking Law".)
Based on the current financial condition and capital levels of UCB,
Bancshares does not expect that the transitional risk-based assessment
schedule will have a material impact on UCB's future earnings.
Various proposals are currently being considered by
committees of the United States Congress concerning a possible merger
of the SAIF and BIF of the FDIC. One of the principal issues under
discussion is the amount of additional funds needed to recapitalize
the SAIF prior to such a merger. Substantially all of the proposals
under consideration contemplate a one-time special assessment to be
levied on SAIF-insured deposits, which assessment has ranged from $.66
to $.85 per $100 of SAIF-insured deposits maintained by the institution
assessed. In addition, the various proposals differ as to whether the
proposed assessment will be deductible for tax purposes by the
institution assessed. At September 30, 1995, UCB had approximately
$125 million of SAIF-insured deposits which would be subject to such a
special assessment. Due to the uncertainty as to which, if any, of the
various proposals will be adopted and the ultimate amount and tax
deductability of the assessment to be levied on UCB, the impact of the
proposals and the assessment on UCB is impossible to predict with
certainty at this time.
Further, under current federal law, depository
institutions are subject to the restrictions contained in Section 22(h)
of the Federal Reserve Act with respect to loans to directors,
executive officers and principal shareholders. Under Section 22(h),
loans to directors, executive officers and shareholders who own more
than 10% of a depository institution (18% in the case of institutions
located in an area with less than 30,000 in population), and certain
affiliated entities of any of the foregoing, may not exceed, together
with all other outstanding loans to such person and affiliated
entities, the institution's loan-to-one-borrower limit as
established by federal law (as discussed below). Section 22(h) also
prohibits loans above amounts prescribed by the appropriate federal
banking agency to directors, executive officers and shareholders who
own more than 10% of an institution, and their respective affiliates,
unless such loans are approved in advance by a majority of the board of
directors of the institution. Any "interested" director may not
participate in the voting. The Federal Reserve has prescribed the loan
amount (which includes all other outstanding loans to such person), as
to which such prior board of director approval is required, as being
the greater of $25,000 or 5% of capital and surplus (up to $500,000).
Further, pursuant to Section 22(h), the Federal Reserve requires that
loans to directors, executive officers, and principal shareholders be
made on terms substantially the same as offered in comparable
transactions to other persons.
47
<PAGE>
UCB is subject to FDIC-imposed loan-to-one-borrower limits
which are substantially the same as those applicable to national
banks. Under these limits, no loans and extensions of credit to any
borrower outstanding at one time and not fully secured by readily
marketable collateral shall exceed 15% of the unimpaired capital and
unimpaired surplus of the bank. Loans and extensions of credit
fully secured by readily marketable collateral may comprise an
additional 10% of unimpaired capital and unimpaired surplus. These
limits also authorize banks to make loans to one borrower, for any
purpose, in an amount not to exceed $500,000.
Regulations promulgated by the FDIC pursuant to the 1991
Banking Law place limitations on the ability of insured depository
institutions to accept, renew or roll over deposits by offering
rates of interest which are significantly higher than the prevailing
rates of interest on deposits offered by other insured depository
institutions having the same type of charter in such depository
institution's normal market area. Under these regulations, "well
capitalized" depository institutions may accept, renew or roll
such deposits over without restriction, "adequately capitalized"
depository institutions may accept, renew or roll such deposits over
with a waiver from the FDIC (subject to certain restrictions on
payments of rates), and "undercapitalized" depository institutions may
not accept, renew or roll such deposits over. The regulations
contemplate that the definitions of "well capitalized," "adequately
capitalized" and "undercapitalized" will be the same as the definition
adopted by the agencies to implement the corrective action provisions
of the 1991 Banking Law. (See " - Impact of the 1991 Banking Law".)
UCB is subject to examination by the FDIC and the Commissioner.
In addition, UCB is subject to various other state and federal laws and
regulations, including state usury laws, laws relating to fiduciaries,
consumer credit and equal credit, fair credit reporting laws and
laws relating to branch banking. UCB, as an insured North Carolina
commercial bank, is prohibited from engaging as a principal in
activities that are not permitted for national banks, unless (i) the
FDIC determines that the activity would pose no significant risk to the
appropriate deposit insurance fund and (ii) the bank is, and continues
to be, in compliance with all applicable capital standards.
Under Chapter 53 of the North Carolina General Statutes, if
the capital stock of a North Carolina commercial bank is impaired by
losses or otherwise, the Commissioner is authorized to require
payment of the deficiency by assessment upon the bank's shareholders,
pro rata, and to the extent necessary, if any such assessment is not
paid by any shareholder, upon 30 days notice, to sell as much as is
necessary of the stock of such shareholder to make good the deficiency.
Bancshares is the sole shareholder of UCB.
Triad. Triad is a North Carolina commercial bank. Triad's
deposits are insured by the FDIC through the BIF, and it is subject
to examination and regulation by the FDIC and the Commissioner and to
regulations governing such matters as capital standards, mergers,
establishment of branch offices, subsidiary investments and activities,
and general investment authority to the same extent as UCB.
The following table sets forth the consolidated FDIC
regulatory capital positions of Triad as of September 30, 1995:
<TABLE>
<CAPTION>
Risk-Based Capital
Leverage Capital Tier I Tier II
% of % of % of
Amount Assets Amount Assets Amount Assets
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Actual . . . . . . . . $ 14,967 7.51% $14,967 11.07% $16,669 12.33%
Minimum capital
standard . . . . . . 7,969 4.00 5,407 4.00 10,814 8.00
Excess of actual
regulatory capital over
minimum regulatory
capital standard . . . $ 6,998 3.51% $ 9,560 7.07% 5,855 4.33%
</TABLE>
Impact of the 1991 Banking Law. Among other things, the 1991
Banking Law provides increased funding for the BIF and the SAIF, and
provides for expanded regulation of depository institutions and their
affiliates, including parent holding companies.
The 1991 Banking Law provides authority for special
assessments against insured deposits and for the development of a
general risk-based deposit insurance assessment system which the FDIC
implemented on a transitional basis effective
48
<PAGE>
January 1, 1993. The BIF and SAIF funding provisions could result in a
significant increase in the assessment rate on deposits of BIF and
SAIF institutions over the next 15 years. No assurance can be given at
this time as to what levels of assessments against insured deposits will
be applied in the future.
The 1991 Banking Law provides the federal banking agencies
with broad powers to take corrective action to resolve the problems of
insured depository institutions. The extent of these powers will
depend upon whether the institutions in question are "well
capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," or "critically undercapitalized." In
September 1992, each of the federal banking agencies issued final
uniform regulations to be effective December 19, 1992, which
define such capital levels. Under the final regulations, an
institution is considered "well capitalized" if it has (i) a total
risk-based capital ratio of 10% or greater, (ii) a Tier I risk-based
capital ratio of 6% or greater, (iii) a leverage ratio of 5% or greater
and (iv) is not subject to any order or written directive to meet and
maintain a specific capital level for any capital measure. An
"adequately capitalized" institution is defined as one that has (i)
a total risk-based capital ratio of 8% or greater, (ii) a Tier I
risk-based capital ratio of 4% or greater and (iii) a leverage ratio of
4% or greater (or 3% or greater in the case of an institution with
the highest examination rating). An institution is considered (A)
"undercapitalized" if it has (i) a total risk-based capital ratio of
less than 8%, (ii) a Tier I risk-based capital ratio of less than 4% or
(iii) a leverage ratio of less than 4% (or 3% in the case of an
institution with the highest examination rating; (B) "significantly
undercapitalized" if the institution has (i) a total risk-based capital
ratio of less than 6%, or (ii) a Tier I risk-based capital ratio of
less than 3% or (iii) a leverage ratio of less than 3% and (C)
"critically undercapitalized" if the institution has a ratio of
tangible equity to total assets equal to or less than 2%.
The 1991 Banking Law also amended the prior law with
respect to the acceptance of brokered deposits by insured depository
institutions to permit only a "well capitalized" (as defined in the
statute as significantly exceeding each relevant minimum capital
level) depository institution to accept brokered deposits without
prior regulatory approval. In June 1992, the FDIC issued final
regulations implementing these provisions regulating brokered deposits.
Under the regulations, "well-capitalized" banks may accept brokered
deposits without restrictions, "adequately capitalized" banks may
accept brokered deposits with a waiver from the FDIC (subject to
certain restrictions on payment of rates), while "under-capitalized"
banks may not accept brokered deposits. The regulations contemplate
that the definitions of "well capitalized," "adequately capitalized" and
"under capitalized" are the same as the definitions adopted by the
agencies to implement the prompt corrective action provisions of the
1991 Banking Law (as described in the previous paragraph).
Bancshares does not believe that these regulations have had or will have
a material adverse effect on the current operations of its depository
institution subsidiaries.
To facilitate the early identification of problems, the
1991 Banking Law requires the federal banking agencies to review and,
under certain circumstances, prescribe more stringent accounting and
reporting requirements than those required by generally accepted
accounting principles. The FDIC issued a final rule, effective July 2,
1993, implementing those provisions. The rule, among other
things, requires that management report on the institution's
responsibility for preparing financial statements and establishing and
maintaining an internal control structure and procedures for financial
reporting and compliance with designated laws and regulations concerning
safety and soundness, and that independent auditors attest to and
report separately on assertions in management's reports concerning
compliance with such laws and regulations, using FDIC-approved audit
procedures.
The 1991 Banking Law further requires the federal
banking agencies to develop regulations requiring disclosure of
contingent assets and liabilities and, to the extent feasible and
practicable, supplemental disclosure of the estimated fair market value
of assets and liabilities. The 1991 Banking Law also requires annual
examinations of all insured depository institutions by the
appropriate federal banking agency, with some exceptions for small,
well-capitalized institutions and state chartered institutions
examined by state regulators. Moreover, the federal banking agencies
are required to set operational and managerial, asset quality, earnings
and stock valuation standards for insured depository institutions and
depository institution holding companies, as well as compensation
standards for insured depository institutions that prohibit
excessive compensation, fees or benefits to officers, directors,
employees, and principal shareholders.
The foregoing necessarily is a general description of certain
provisions of the 1991 Banking Law and does not purport to be
complete. Several of the provisions of the 1991 Banking Law will be
implemented through regulations issued by the various federal banking
agencies, only a portion of which have been adopted in final form. The
effect of the 1991 Banking Law on Bancshares and its subsidiaries
will not be fully ascertainable until after all of the provisions are
effective and after all of the regulations are adopted.
49
<PAGE>
CAPITAL STOCK OF BANCSHARES AND TRIAD
Capital Stock of Bancshares
Authorized Capital. The authorized capital stock of
Bancshares consists of (i) 40,000,000 shares of $4.00 par value common
stock (which is the Bancshares Stock into which outstanding shares of
Triad Stock will be converted), of which 14,768,740 shares were issued
and outstanding at September 30, 1995, and (ii) 2,000,000 shares of
$10.00 par value preferred stock, of which there were no shares issued
and outstanding at September 30, 1995.
Voting Rights. The holders of Bancshares Stock are
entitled to one vote per share held of record on all matters submitted
to a vote of shareholders. Bancshares' shareholders are not entitled
to vote cumulatively in the election of directors.
Merger, Share Exchange, Sale of Assets and Dissolution. In
general, North Carolina law requires that any merger, share exchange,
voluntary liquidation or transfer of substantially all the assets (other
than in the ordinary course of business) of a business corporation be
approved by the corporation's shareholders by a majority of the votes
entitled to be cast on the proposed transaction. However,
Bancshares charter provides that, except as described below, the
affirmative vote of the holders of not less than 75% of the outstanding
shares of each class of Bancshares' capital stock entitled to vote
will be required to authorize (i) any merger or consolidation of
Bancshares into or with any other corporation, (ii) any sale,
lease, exchange, mortgage, transfer or other disposition of all or any
substantial part (more than 10%) of Bancshares' assets, (iii) the
issuance or transfer of any securities of Bancshares or any subsidiary
to an "Interested Shareholder" (any person who, together with his or its
affiliates, beneficially owns 10% or more of any class of
Bancshares' capital stock), (iv) any recapitalization or
reclassification of securities that would have the effect of
increasing the voting power of any Interested Shareholder, or (v) the
adoption of any plan proposed by an Interested Shareholder for
Bancshares' liquidation or dissolution. The above "supermajority" vote
will not be required if the transaction to be approved has been approved
by at least two-thirds of Bancshares' directors and satisfies certain
"fair price" requirements.
Charter Amendments. Subject to certain conditions, an
amendment to Bancshares' charter, including a provision to increase
the authorized capital stock of Bancshares, may be effected if the
amendment is approved by a simple majority of the votes cast on the
amendment by every voting group entitled to vote on the amendment (and
by a majority of the votes entitled to be cast on the amendment by
any separate voting group with respect to which the amendment would
create Dissenter's Rights). However, the affirmative vote of the
holders of not less than 75% of the outstanding voting shares of all
classes of Bancshares capital stock is required to approve any
modification or amendment of the "supermajority" provision contained in
Bancshares' charter (as described above). Additionally, North Carolina
law allows Bancshares' Board of Directors, as a condition to its
approval of any charter amendment, to require that the amendment be
approved by a vote of shareholders greater than otherwise would be
required by law.
Dividends. Holders of Bancshares Stock are entitled to
dividends when and if declared by Bancshares' Board of Directors from
funds legally available, whether in cash or in stock. (See "-
Differences in Capital Stock of Bancshares and Triad.")
Miscellaneous. In accordance with North Carolina law,
holders of Bancshares Stock are entitled, upon dissolution or
liquidation, to participate ratably in the distribution of assets
legally available for distribution to shareholders after payment of
debts. Shareholders do not have preemptive rights to acquire other or
additional shares which might be issued by Bancshares, or any
redemption, sinking fund or conversion rights. Bancshares Stock may be
used as collateral to secure a loan from UCB.
Differences in Capital Stock of Bancshares and Triad
Upon consummation of the Merger, Triad's shareholders (other
than those shareholders who exercise Dissenter's Rights) will become
shareholders of Bancshares. Certain legal distinctions exist between
owning Bancshares Stock and Triad Stock.
Triad is a North Carolina commercial bank, and the rights
of the holders of Triad Stock are governed by Chapter 53 of the North
Carolina General Statutes which is applicable to North Carolina banks
("Chapter 53") and Chapter 55 of the North Carolina General
Statutes which is applicable to North Carolina business corporations
("Chapter 55"). Bancshares is a North Carolina business corporation
and the rights of the holders of Bancshares Stock are governed solely by
Chapter 55.
50
<PAGE>
Because of differences between Chapter 53 and Chapter 55,
the Merger will result in certain changes in the rights of Triad's
shareholders who receive Bancshares Stock in exchange for their
Triad Stock. While it is not practical to describe all differences,
those basic differences which will have the most significant effect on
the rights of Triad's shareholders if they become shareholders of
Bancshares are discussed below.
The following is only a general summary of certain
differences in the rights of holders of Bancshares Stock and those of
holders of Triad Stock. Shareholders should consult with their own
legal counsel with respect to specific differences and changes in their
rights as shareholders which will result from the Merger.
Charter Amendments. Chapter 53 requires that, following
shareholder approval, amendments to Triad's charter must be approved
by the Commissioner. Amendments to Bancshares' charter are not
required to be approved by the Commissioner or by any other banking
regulator.
Dividends. The shareholders of Bancshares and Triad are
entitled to dividends when and if declared by their respective Boards of
Directors, subject to the restrictions described below.
Pursuant to Chapter 55, Bancshares is authorized to pay
dividends as are declared by its Board of Directors, provided that no
such distribution results in its insolvency on a going concern or
balance sheet basis. The principal sources of funds for the payment
of dividends by Bancshares are dividends from UCB. The ability of UCB
to pay dividends is subject to statutory and regulatory
restrictions on the payment of cash dividends, including the
requirement under North Carolina banking laws that cash dividends be
paid only out of undivided profits and only if the bank has surplus
of a specified level. Federal bank regulatory authorities also have the
general authority to limit the dividends paid by insured banks and
bank holding companies if such payment may be deemed to constitute an
unsafe and unsound practice.
Triad, as a North Carolina bank, is subject to the same
restrictions on the payment of dividends as UCB.
Merger, Share Exchange, Sale of Assets, or Dissolution.
Pursuant to Chapter 53, Triad may not merge or consolidate with any
other entity, or sell substantially all of its assets to any other
entity, without the prior approval of the holders of at least
two-thirds of its outstanding shares and the prior written approval of
the Commissioner. (See "PROPOSAL 1: THE MERGER Required Regulatory
Approvals.") In addition, pursuant to Chapter 53, Triad may not be
dissolved without the prior approval of the holders of at least
two-thirds of its outstanding shares. As described above (see "-
Capital Stock of Bancshares"), different levels of shareholder approval
are required in order for Bancshares to engage in those transactions
under Chapter 55 and Bancshares' charter.
The prior approval of Bancshares' shareholders is not required
to effect a merger of a bank into UCB or UCBSC provided that Bancshares
remains in control of its subsidiary following consummation of the
merger. Therefore, future acquisitions by Bancshares through the
merger of a third party bank with or into UCB or UCBSC could be
effected without the approval of Bancshares' shareholders.
Repurchase of Capital Stock. Under federal and North Carolina
law, Triad may not purchase any of its capital stock without the prior
approval of the FDIC and the Commissioner. No repurchase will be
allowed if the effect of such transaction would be to reduce the net
worth of Triad to an amount which is less than the minimum amount
required by applicable federal and state regulations. Further,
shareholder approval is necessary under North Carolina law.
Under Chapter 55, Bancshares may repurchase its capital stock
by action of its Board of Directors without the prior approval of its
shareholders. However, as a bank holding company, Bancshares is
required to give the Federal Reserve at least 45 days' prior written
notice of the purchase or redemption of any shares of its outstanding
equity securities if the gross consideration to be paid for such
purchase or redemption, when aggregated with the net consideration paid
by Bancshares for all purchases or redemptions of its equity
securities during the 12 months preceding the date of notification,
equals or exceeds 10% of Bancshares' consolidated net worth as of the
date of such notice. The Federal Reserve may permit a purchase or
redemption to be accomplished prior to expiration of the 45-day notice
period if it determines that the repurchase or redemption would not
constitute an unsafe or unsound practice and that it would not violate
any applicable law, rule, regulation or order, or any condition imposed
by, or written agreement with, the Federal Reserve.
Regulation of Transferability. The capital stock of Triad,
unlike that of Bancshares, is exempt from the registration requirements
of the 1933 Act and the North Carolina Securities Act. The effect of
such exemptions is to allow Triad and
51
<PAGE>
its shareholders to sell Triad Stock without registration under such
laws. In contrast, the public sale by Bancshares of its stock, and
resales of Bancshares Stock by certain persons who at the time of resale
are "affiliates" of Bancshares, must be registered under the 1933
Act and the North Carolina Securities Act or meet certain statutory and
regulatory requirements to qualify for an exemption from registration.
The exemption from registration under the 1933 Act most often used
by affiliates of public corporations is Rule 144 which limits the amount
of stock that can be sold during any three-month period and requires,
among other things, that affiliates' shares be sold in "brokers'
transactions" without any solicitation of offers to purchase such
shares.
INDEMNIFICATION
Chapter 55 provides for indemnification by a corporation of
its officers, directors, employees and agents, and any person who is or
was serving at the corporation's request as a director, officer,
employee or agent of another entity or enterprise or as a trustee or
administrator under an employee benefit plan, against liability and
expenses, including reasonable attorney's fees, in any proceeding
(including without limitation a proceeding brought by or on behalf of
the corporation itself) arising out of their status as such or their
activities in any of the foregoing capacities.
Permissible Indemnification. Under Chapter 55, a corporation
may, but is not required to, indemnify or agree to indemnify any such
person against liability and expenses incurred in any such proceeding,
provided such person conducted himself or herself in good faith and
(i) in the case of conduct in his or her official corporate capacity,
reasonably believed that his or her conduct was in the
corporation's best interests, and (ii) in all other cases, reasonably
believed that his or her conduct was at least not opposed to the
corporation's best interests; and, in the case of a criminal
proceeding, where he or she had no reasonable cause to believe his or
her conduct was unlawful. However, a corporation may not indemnify such
person either in connection with a proceeding by or in the right of the
corporation in which such person was adjudged liable to the
corporation, or in connection with any other proceeding charging
improper personal benefit to such person (whether or not involving
action in an official capacity) in which such person was adjudged liable
on the basis that personal benefit was improperly received.
Mandatory Indemnification. Unless limited by the corporation's
charter, Chapter 55 requires a corporation to indemnify a director or
officer of the corporation who is wholly successful, on the merits or
otherwise, in the defense of any proceeding to which such person was
a party because he or she is or was a director or officer of the
corporation against reasonable expenses incurred in connection with the
proceeding.
Advance for Expenses. Expenses incurred by a director,
officer, employee or agent of the corporation in defending a proceeding
may be paid by the corporation in advance of the final disposition
of the proceeding as authorized by the board of directors in the
specific case, or as authorized by the charter or bylaws or by any
applicable resolution or contract, upon receipt of an undertaking
by or on behalf of such person to repay amounts advanced unless it
ultimately is determined that such person is entitled to be indemnified
by the corporation against such expenses.
Court-Ordered Indemnification. Unless otherwise provided in
the corporation's charter, a director or officer of the corporation who
is a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court, after giving any
notice the court deems necessary, may order indemnification if it
determines either (i) that the director or officer is entitled to
mandatory indemnification as described above, in which case the court
also will order the corporation to pay the reasonable expenses incurred
to obtain the court-ordered indemnification, or (ii) that the director
or officer is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not such person met
the requisite standard of conduct or was adjudged liable to the
corporation in connection with a proceeding by or in the right of the
corporation or on the basis that personal benefit was improperly
received in connection with any other proceeding so charging (but
if adjudged so liable, indemnification is limited to reasonable
expenses incurred).
Voluntary Indemnification. In addition to and separate
and apart from "permissible" and "mandatory" indemnification
described above, a corporation may, by charter, bylaw, contract or
resolution, indemnify or agree to indemnify any one or more of its
officers, directors, employees and agents against liability and expenses
in any proceeding (including without limitation a proceeding brought
by or on behalf of the corporation itself) arising out of their status
as such or their activities in any of the foregoing capacities.
However, the corporation may not indemnify or agree to indemnify a
person against liability or expenses he or she may incur on account of
activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interests of the
corporation. Any provision in a corporation's charter or bylaws
52
<PAGE>
or in a contract or resolution may include provisions for recovery from
the corporation of reasonable costs, expenses and attorneys' fees in
connection with the enforcement of rights to indemnification granted
therein and may further include provisions establishing reasonable
procedures for determining and enforcing such rights.
Parties Entitled to Indemnification. Chapter 55 defines
"director" to include ex-directors and the estate or personal
representative of a director. Unless its charter provides otherwise, a
corporation may indemnify and advance expenses to an officer,
employee or agent of the corporation to the same extent as to a
director and also may indemnify and advance expenses to an officer,
employee or agent who is not a director to the extent, consistent with
public policy, as may be provided in its charter or bylaws, by general
or specific action of its board of directors, or by contract.
Indemnification by Bancshares and UCB. Subject to such
restrictions as are provided by federal securities law, Bancshares' and
UCB's Bylaws provide for indemnification of their respective
directors and officers to the fullest extent permitted by law and
require their respective Boards of Directors to take all actions
necessary and appropriate to authorize such indemnification. In
addition, Bancshares and UCB currently maintain directors' and officers'
liability insurance.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers or
persons controlling Bancshares pursuant to the foregoing provisions,
Bancshares has been informed that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in said Act and is, therefore, unenforceable.
Release of Director Liability. As permitted by Chapter 55,
Bancshares' Articles of Incorporation limit the personal liability of
its directors in any action by or in the right of the corporation or
otherwise for monetary damages for breach of their duties as directors.
TAX AND LEGAL MATTERS
The validity of the shares of Bancshares Stock to be issued
to Triad's shareholders in connection with the Merger will be passed
upon for Bancshares by Howard V. Hudson, Jr., Esq., who is employed as
General Counsel and Secretary of Bancshares and UCB and, at
September 30, 1995, beneficially owned 16,052 shares of Bancshares
Stock. Certain other legal matters will be passed upon for Bancshares
and UCB by McCoy, Weaver, Wiggins, Cleveland & Raper, Fayetteville,
North Carolina, which serves as special counsel to Bancshares and
UCB with respect to the Merger. Certain members of that firm
beneficially own an aggregate of approximately 29,095 shares of
Bancshares Stock. Certain legal matters will be passed upon for Triad by
Ward and Smith, P.A., Raleigh, North Carolina.
The federal and North Carolina income tax consequences of
the Merger have been passed upon by KPMG Peat Marwick LLP, Raleigh,
North Carolina.
EXPERTS
The consolidated financial statements of Bancshares as of
December 31, 1994 and 1993, and for each of the years in the
three-year period ended December 31, 1994, have been incorporated
by reference herein and in the Registration Statement in reliance upon
the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick LLP refers to the fact that on December 31,
1993, Bancshares adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," and
on January 1, 1993, Bancshares adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." The report of KPMG
Peat Marwick LLP also refers to the fact that on January 1, 1994,
Bancshares adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits."
The financial statements of Triad as of December 31, 1994 and
1993, and for each of the years in the three-year period ended
December 31, 1994, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG Peat Marwick LLP refers to the fact
that on January 1, 1994, Triad adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," and on January
53
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1, 1993, Triad adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."
OTHER MATTERS
Triad's Board of Directors does not intend to bring any
matter before the Special Meeting other than as specifically set forth
in this Prospectus/Proxy Statement, and it knows of no other business
that will be brought before the Special Meeting by any other person.
However, should other matters properly be presented for action at the
Special Meeting, the Proxies or their substitutes, will be authorized
to vote shares represented by appointments of proxy according to their
best judgment on such matters.
PROPOSALS OF SHAREHOLDERS
If for any reason the Merger is not consummated, then a 1996
Annual Meeting of Triad's shareholders likely would be held during
May 1996. In such event, any proposal (other than nominations for
directors) of a shareholder intended to be presented at that meeting
would have to have been received by Triad at its main office in
Greensboro, North Carolina, no later than January 31, 1996, to be
considered timely received for inclusion in the proxy statement and
appointment of proxy issued in connection with that meeting.
54
<PAGE>
APPENDIX A
AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
BY AND AMONG
TRIAD BANK
AND
UNITED CAROLINA BANK
AND
UNITED CAROLINA BANCSHARES CORPORATION
OCTOBER 19, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I. AGREEMENT TO MERGE......................................................................... 2
1.01. Names of Merging Corporations............................................... 2
1.02. Nature of Transaction....................................................... 2
1.03. Effect of Merger; Surviving Corporation...................................... 2
1.04. Assets and Liabilities of Triad.............................................. 2
1.05. Conversion and Exchange of Stock............................................. 2
a. Conversion of Triad Stock.................................................... 2
b. Issuance of Shares by Bancshares; Exchange
Procedures............................................................... 3
c. Treatment of Fractional Shares............................................... 4
d. Surrender of Certificates.................................................... 4
e. Antidilutive Adjustments..................................................... 5
f. Dissenters................................................................... 5
g. Lost Certificates............................................................ 5
h. Treatment of Triad's Stock Options........................................... 5
i. Outstanding Bancshares and UCB Stock......................................... 6
1.06. Articles, By-Laws and Management............................................. 6
1.07. Closing; Plan of Merger; Effective Time...................................... 6
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF TRIAD................................................... 7
2.01. Organization; Standing; Power............................................... 7
2.02. Capital Stock................................................................ 7
2.03. Principal Shareholders....................................................... 7
2.04. Subsidiaries................................................................. 8
2.05. Convertible Securities, Options, Etc......................................... 8
2.06. Authorization and Validity of Agreement...................................... 8
2.07. Validity of Transactions; Absence of Required
Consents or Waivers........................................................8
2.08. Triad Books and Records...................................................... 9
2.09. Triad Reports................................................................ 9
2.10. Triad Financial Statements.................................................. 10
2.11. Tax Returns and Other Tax Matters........................................... 10
2.12. Absence of Material Adverse Changes or Certain
Other Events............................................................. 11
2.13. Absence of Undisclosed Liabilities.......................................... 11
2.14. Compliance with Existing Obligations........................................ 12
2.15. Litigation and Compliance with Law...........................................12
2.16. Real Properties............................................................. 13
2.17. Loans, Accounts, Notes and Other Receivables................................ 14
2.18. Securities Portfolio and Investments........................................ 15
2.19. Personal Property and Other Assets.......................................... 15
2.20. Patents and Trademarks...................................................... 15
2.21. Environmental Matters....................................................... 16
2.22. Absence of Brokerage or Finders Commissions................................. 17
2.23. Material Contracts.......................................................... 18
2.24. Employment Matters; Employee Relations...................................... 18
2.25. Employee Agreements; Employee Benefit Plans................................. 19
2.26. Insurance................................................................... 21
2.27. Insurance of Deposits....................................................... 22
2.28. Affiliates.................................................................. 22
2.29. Obstacles to Regulatory Approval, Accounting
Treatment or Tax Treatment............................................... 22
2.30. Disclosure.................................................................. 22
<PAGE>
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF UCB AND
BANCSHARES........................................................................ 23
3.01. Organization; Standing; Power............................................... 23
3.02. Capital Stock............................................................... 23
3.03. Authorization and Validity of Agreement..................................... 23
3.04. Validity of Transactions; Absence of Required
Consents or Waivers...................................................... 24
3.05 Bancshares Books and Records................................................ 24
3.06. Bancshares Reports.......................................................... 25
3.07. Bancshares Financial Statements............................................. 25
3.08. Absence of Material Adverse Changes......................................... 26
3.09. Litigation and Compliance with Law.......................................... 26
3.10 Environmental Matters....................................................... 27
3.11. Absence of Brokerage or Finders Commissions................................. 28
3.12. Employee Benefit Plans...................................................... 28
3.13. Insurance................................................................... 29
3.14. Obstacles to Regulatory Approval, Accounting
Treatment or Tax Treatment............................................... 30
3.15. Disclosure.................................................................. 30
ARTICLE IV. COVENANTS OF TRIAD........................................................................ 30
4.01. Affirmative Covenants of Triad.............................................. 30
a. "Affiliates" of Triad....................................................... 30
b. Conduct of Business Prior to Effective Time................................. 30
c. Periodic Information Regarding Loans........................................ 31
d. Notice of Certain Changes or Events......................................... 32
e. Consents to Assignment of Leases............................................ 33
f. Further Action; Instruments of Transfer, etc................................ 33
4.02. Negative Covenants of Triad................................................. 33
a. Amendments to Articles of Incorporation or
Bylaws................................................................... 33
b. Change in Capital Stock..................................................... 33
c. Options, Warrants and Rights................................................ 33
d. Dividends................................................................... 34
e. Employment, Benefit or Retirement Agreements
or Plans................................................................. 34
f. Increase in Compensation.................................................... 34
g. Accounting Practices........................................................ 34
h. Acquisitions; Additional Branch Offices..................................... 35
i. Changes in Business Practices............................................... 35
j. Exclusive Merger Agreement.................................................. 35
k. Acquisition or Disposition of Assets........................................ 35
l. Debt; Liabilities........................................................... 36
m. Liens; Encumbrances......................................................... 37
n. Waiver of Rights............................................................ 37
o. Other Contracts............................................................. 37
ARTICLE V. COVENANTS OF UCB AND BANCSHARES............................................................ 37
5.01. Board of Directors.......................................................... 37
a. Appointment of Director......................................................... 37
b. Local Advisory Board............................................................ 38
5.02. Nasdaq Notification of Listing of Additional
Shares of Bancshares Stock.................................................. 38
5.03 Interim Financial Results................................................... 38
<PAGE>
ARTICLE VI. MUTUAL AGREEMENTS.................................................................................. 39
6.01. Shareholders' Meeting; Registration Statement;
Proxy Statement/Prospectus................................................ 39
a. Meeting of Shareholders.......................................................... 39
b. Preparation and Distribution of Proxy
Statement/Prospectus...................................................... 39
c. Registration Statement and "Blue Sky"
Approvals................................................................. 39
d. Recommendation of Triad's Board of
Directors................................................................. 40
e. Information for Proxy Statement/Prospectus and
Registration Statement.................................................... 40
6.02. Regulatory Approvals........................................................ 40
6.03. Access...................................................................... 41
6.04. Costs....................................................................... 41
6.05. Announcements............................................................... 42
6.06. Environmental Studies....................................................... 42
6.07. Employees; Severance Payments; Employee
Benefits................................................................. 43
a. Employment Agreements....................................................... 43
b. Employment of Other Triad Employees......................................... 43
c. Severance Compensation...................................................... 44
d. Employee Benefits........................................................... 45
e. Other Agreements............................................................ 46
6.08. Confidentiality............................................................. 46
6.09. Tax-Free Reorganization..................................................... 47
6.10. Accounting Treatment........................................................ 47
6.11. Directors' and Officers' Liability Insurance................................ 47
6.12 Other Permissible Transactions.............................................. 48
ARTICLE VII. CONDITIONS PRECEDENT TO MERGER........................................................... 48
7.01. Conditions to all Parties' Obligations...................................... 48
a. Approval by Governmental or Regulatory
Authorities; No Disadvantageous Conditions............................... 48
b. Adverse Proceedings, Injunction, Etc........................................ 48
c. Approval by Boards of Directors and
Shareholders............................................................. 49
d. Fairness Opinion............................................................ 49
e. Tax Opinion................................................................. 49
f. No Termination or Abandonment............................................... 50
g. Nasdaq Listing.............................................................. 50
7.02. Additional Conditions to Triad's
Obligations................................................................. 50
a. Material Adverse Change..................................................... 50
b. Compliance with Laws........................................................ 50
c. Bancshares' and UCB's Representations and
Warranties and Performance of Agreements;
Officers' Certificate.................................................. 50
d. Legal Opinion of Bancshares and UCB Counsel................................. 51
e. Other Documents and Information from
Bancshares and UCB....................................................... 51
f. Articles of Merger; Other Actions........................................... 51
g. Acceptance by Triad's Counsel............................................... 51
7.03. Additional Conditions to Bancshares' and UCB's
Obligations.............................................................. 51
a. Material Adverse Change..................................................... 51
b. Compliance with Laws; Adverse Proceedings,
<PAGE>
Injunction, Etc.......................................................... 51
c. Triad's Representations and Warranties and
Performance of Agreements; Officers'
Certificate.............................................................. 52
d. Effectiveness of Registration Statement;
Compliance with Securities and Other "Blue
Sky" Requirements........................................................ 52
e. Agreements from Triad Affiliates............................................ 52
f. Accounting Treatment........................................................ 52
g. Legal Opinion of Triad Counsel.............................................. 53
h. Other Documents and Information from
Triad....................................................................... 53
i. Consents to Assignment of Real Property
Leases...................................................................... 53
j. Acceptance by Bancshares' and UCB's
Counsel..................................................................... 53
k. Certain Merger Expenses..................................................... 53
ARTICLE VIII. TERMINATION; BREACH; REMEDIES........................................................... 53
8.01. Mutual Termination.......................................................... 53
8.02. Unilateral Termination...................................................... 54
a. Termination by Bancshares or UCB............................................ 54
b. Termination by Triad........................................................ 55
c. Extension of Expiration Date................................................ 56
8.03. Breach; Remedies............................................................ 56
8.04. Termination Fee............................................................. 56
ARTICLE IX. INDEMNIFICATION........................................................................... 57
9.01. Indemnification Following Termination of
Agreement................................................................ 57
a. By Triad.................................................................... 57
b. By Bancshares and UCB....................................................... 58
9.02. Indemnification Following Effective Time.................................... 59
9.03. Procedure for Claiming Indemnification...................................... 59
ARTICLE X. MISCELLANEOUS PROVISIONS................................................................... 60
10.01 Previously Disclosed Information............................................. 60
10.02. Survival of Representations, Warranties,
Indemnification and Other Agreements..................................... 60
a. Representations, Warranties and Other
Agreements............................................................... 60
b. Indemnification............................................................. 60
10.03. Waiver...................................................................... 60
10.04. Amendment................................................................... 61
10.05. Notices..................................................................... 61
10.06. Further Assurance........................................................... 62
10.07. Headings and Captions....................................................... 62
10.08. Entire Agreement............................................................ 62
10.09. Severability of Provisions.................................................. 62
10.10. Assignment.................................................................. 62
10.11. Counterparts................................................................ 62
10.12. Governing Law............................................................... 62
10.13. Inspection.................................................................. 62
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
TRIAD BANK
AND
UNITED CAROLINA BANK
AND
UNITED CAROLINA BANCSHARES CORPORATION
THIS AGREEMENT AND PLAN OF REORGANIZATION AND
MERGER (hereinafter called "Agreement") entered into as of the 19th
day of October, 1995, by and among TRIAD BANK ("Triad"), UNITED CAROLINA
BANK ("UCB") and UNITED CAROLINA BANCSHARES CORPORATION ("Bancshares").
WHEREAS, Triad is a North Carolina banking
corporation with its principal office and place of business located
in Greensboro, North Carolina; and BT Financial Corp. (the
"Subsidiary") is a North Carolina business corporation with its
principal office and place of business located in Greensboro,
North Carolina, and is the wholly-owned subsidiary of Triad; and,
WHEREAS, UCB is a North Carolina banking corporation
with its principal office and place of business located in Whiteville,
North Carolina; and,
WHEREAS, Bancshares is a North Carolina business
corporation with its principal office and place of business located in
Whiteville, North Carolina, and is the parent company of UCB; and,
WHEREAS, Bancshares, UCB and Triad have agreed that
it is in their mutual best interests and in the best interests of
their respective shareholders for Triad to be merged into UCB with
the effect that each of the outstanding shares of Triad's common
stock will be converted into newly issued shares of Bancshares' common
stock, all in the manner and upon the terms and conditions contained in
this Agreement; and,
WHEREAS, to effectuate the foregoing, Bancshares,
UCB and Triad desire to adopt this Agreement as a plan of reorganization
in accordance with the provisions of Section 368(a) of the Internal
Revenue Code of 1986, as amended; and,
WHEREAS, while Triad's Board of Directors has
approved this Agreement, Triad has executed this Agreement subject
to the approval of its shareholders and has agreed to call a special
meeting of its shareholders for the purpose of voting on the Agreement
and will recommend to its shareholders that they approve the Agreement
and the transactions described herein; and,
WHEREAS, Bancshares' and UCB's Boards of
Directors have approved this Agreement and the transactions described
herein, including the issuance by Bancshares of shares of its common
stock to Triad's shareholders to effectuate such transactions.
<PAGE>
NOW, THEREFORE, in consideration of the premises, the
mutual benefits to be derived from this Agreement, and of the
representations, warranties, conditions, covenants and promises herein
contained, and subject to the terms and conditions hereof, Bancshares,
UCB and Triad hereby adopt and make this Agreement and mutually agree as
follows:
ARTICLE I. AGREEMENT TO MERGE
1.01. NAMES OF MERGING CORPORATIONS. The names of
the corporations proposed to be merged are TRIAD BANK ("Triad") and
UNITED CAROLINA BANK ("UCB").
1.02. NATURE OF TRANSACTION. Subject to the
provisions of this Agreement, at the "Effective Time" (as defined in
Paragraph 1.07. below), Triad shall be merged into and with UCB pursuant
to N.C. GEN. STAT. (section mark) 53-12 (the "Merger").
1.03. EFFECT OF MERGER; SURVIVING CORPORATION. At the
Effective Time and as provided in N.C. GEN. STAT. (section mark)
53-13, by reason of the Merger the separate corporate existence of
Triad shall cease while the corporate existence of UCB as the surviving
corporation in the Merger shall continue with all of its purposes,
objects, rights, privileges, powers and franchises, all of which shall
be unaffected and unimpaired by the Merger. Following the Merger, UCB
shall continue to operate as the wholly-owned banking subsidiary of
Bancshares and, as a North Carolina banking corporation, will continue
to conduct its business at the then legally established branch and
main offices of UCB and Triad. The duration of the corporate
existence of UCB, as the surviving corporation, shall be perpetual and
unlimited.
1.04. ASSETS AND LIABILITIES OF TRIAD. At the
Effective Time and by reason of the Merger, and in accordance with N.C.
GEN. STAT. (section mark)(section mark) 53-13, 53-17 and 55-11-06,
all of Triad's property, assets and rights of every kind and character
(including without limitation all real, personal or mixed property,
all debts due on whatever account, all other choses in action and all
and every other interest of or belonging to or due to Triad, whether
tangible or intangible) shall be transferred to and vest in UCB, and UCB
shall succeed to all the rights, privileges, immunities, powers,
purposes and franchises of a public or private nature (including all
trust and fiduciary properties, powers and rights) of Triad, all
without any conveyance, assignment or further act or deed; and, UCB
shall become responsible for all of the liabilities, duties and
obligations of every kind, nature and description (including duties
as trustee or fiduciary) of Triad as of the Effective Time.
1.05. CONVERSION AND EXCHANGE OF STOCK.
a. CONVERSION OF TRIAD STOCK. At the Effective
Time, all rights of Triad's shareholders with respect to all then
outstanding shares of Triad's $2.50 par value common stock ("Triad
2
<PAGE>
Stock") shall cease to exist, and, as consideration for and to
effectuate the Merger (and except as otherwise provided below) each
such outstanding share of Triad Stock (other than any shares held by
Triad as treasury shares or shares held by Bancshares or as to which
rights of dissent and appraisal are properly exercised as provided
below) shall be converted, without any action on the part of the
holder of such share, Bancshares, UCB or Triad, into .569444 (the
"Exchange Rate") newly issued shares of Bancshares' $4.00 par
value common stock ("Bancshares Stock"). Notwithstanding
anything contained herein to the contrary, (i) if the average of the
closing prices of Bancshares Stock on the Nasdaq National Market for
the thirty (30) consecutive trading days immediately preceding the
date of the Shareholder Meeting (as defined below) (the "30-Day
Average") is greater than $40.39, then the Exchange Rate shall be
adjusted to be equal to the ratio (rounded to six decimal places) of
$23.00 to the 30-Day Average, and (ii) if the 30-Day Average is less
than $31.61, then the Exchange Rate shall be adjusted to be equal to
the ratio (rounded to six decimal places) of $18.00 to the 30-Day
Average. Provided, however, in the event the 30-Day Average is
greater than $43.20 and Bancshares or UCB has become a party to an
agreement in principle or a binding agreement that contemplates a merger
of Bancshares or UCB into or with any other entity (other than with the
other or with any affiliated corporation) and in which Bancshares or
UCB will not be the surviving corporation or a sale of substantially
all of Bancshares' or UCB's assets to any other such entity, the
Exchange Rate shall be fixed at .569444.
At the Effective Time, and without any action by
Triad, UCB, Bancshares or any holder thereof, Triad's stock transfer
books shall be closed as to holders of Triad Stock immediately prior
to the Effective Time and, thereafter, no transfer of Triad Stock
by any such holder may be made or registered; and the holders of
shares of Triad Stock shall cease to be, and shall have no further
rights as, stockholders of Triad other than as provided herein.
Following the Effective Time, certificates representing shares of Triad
Stock outstanding at the Effective Time (herein sometimes referred to
as "Old Certificates") shall evidence only the right of the registered
holder thereof to receive, and may be exchanged for, (i) certificates
for the number of whole shares of Bancshares Stock to which such
holders shall have become entitled on the basis set forth above, plus
cash for any fractional share interests as provided herein, (ii)
in the case of shares as to which rights of dissent and appraisal are
properly exercised (as provided below), cash as provided in Article
13 of the North Carolina Business Corporation Act.
b. ISSUANCE OF SHARES BY BANCSHARES; EXCHANGE
PROCEDURES. At the Effective Time, Bancshares shall issue and deliver
to UCB, in its capacity as Bancshares' agent for purposes of the
exchange of Bancshares Stock for Triad Stock (the "Exchange Agent"), one
certificate representing the aggregate number of whole shares of
Bancshares Stock into which the outstanding shares of Triad Stock have
been converted as provided above. As promptly as practicable
following the Effective Time, Bancshares shall send or
3
<PAGE>
cause to be sent to each former shareholder of Triad of record
immediately prior to the Effective Time written instructions and
transmittal materials (a "Transmittal Letter") for use in surrendering
Old Certificates to the Exchange Agent. Upon the proper delivery to
the Exchange Agent (in accordance with the above instructions,
and accompanied by a properly completed Transmittal Letter) by a former
shareholder of Triad of his or her Old Certificates, the Exchange Agent
shall register in the name of such shareholder the shares of
Bancshares Stock and deliver said New Certificates to the individual
shareholder entitled thereto upon and in exchange for the surrender and
delivery to the Exchange Agent by said individual shareholder of his or
her Old Certificates.
c. TREATMENT OF FRACTIONAL SHARES. No scrip or
certificates representing fractional shares of Bancshares Stock will be
issued to any former shareholder of Triad, and, except as provided
below, no such shareholder will have any right to vote or receive any
dividend or other distribution on, or any other right with respect to,
any fraction of a share of Bancshares Stock resulting from the above
exchange. In the event the exchange of shares would result in the
creation of fractional shares, then, in lieu of the issuance of
fractional shares of Bancshares Stock, Bancshares shall deliver cash to
the Exchange Agent in an amount equal to the aggregate market value
of all such fractional shares, and the Exchange Agent shall divide
such cash among and remit it (without interest) to the former
shareholders of Triad in accordance with their respective interests.
For purposes of this Paragraph 1.05.c., the "aggregate market value"
of all fractional shares of Bancshares Stock shall be equal to the
total of such fractional shares multiplied by the average of the
closing prices of Bancshares Stock on the Nasdaq National Market for
the thirty (30) consecutive trading days immediately preceding
the Shareholder Meeting (as defined below).
d. SURRENDER OF CERTIFICATES. Subject to Paragraph
1.05.f. below, no certificate for any shares, or cash for any
fractional share, of Bancshares Stock shall be delivered to any
former shareholder of Triad unless and until such shareholder shall
have properly surrendered to the Exchange Agent the Old Certificate(s)
formerly representing his or her shares of Triad Stock, together with a
properly completed Transmittal Letter in such form as shall be
provided to the shareholder by Bancshares for that purpose. Further,
until such Old Certificate(s) are so surrendered, no dividend or other
distribution payable to holders of record of Bancshares Stock as of
any date subsequent to the Effective Time shall be delivered to the
holder of such Old Certificate(s). However, upon the proper surrender
of such Old Certificate(s) the Exchange Agent shall pay to the
registered holder of the shares of Bancshares Stock represented by such
Old Certificate(s) the amount of any such
4
<PAGE>
cash, dividends or distributions which have accrued but remain
unpaid with respect to such shares. Neither Bancshares, UCB, Triad,
nor the Exchange Agent, shall have any obligation to pay any
interest on any such cash, dividends or distributions for any period
prior to such payment. Further, and notwithstanding any other
provision of this Agreement, neither Bancshares, UCB, Triad, nor the
Exchange Agent shall be liable to a former holder of Triad Stock for
any amount paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat, or similar law.
e. ANTIDILUTIVE ADJUSTMENTS. If, following the date
of this Agreement, Bancshares shall change the number of
outstanding shares of Bancshares Stock as a result of a dividend
payable in shares of Bancshares Stock, a stock split, a
reclassification or other subdivision or combination of outstanding
shares, and if the record date of such event occurs prior to the
Effective Time, then an appropriate and proportionate adjustment will be
made to increase or decrease the number of shares of Bancshares Stock
to be issued in exchange for each of the shares of Triad Stock.
f. DISSENTERS. Any shareholder of Triad who has and
properly exercises the right of dissent and appraisal with respect
to the Merger as provided in Article 13 of the North Carolina
Business Corporation Act ("Dissenters Rights") shall be entitled to
receive payment of the fair value of his or her shares of Triad Stock in
the manner and pursuant to the procedures provided therein. Shares
of Triad Stock held by persons who exercise Dissenters Rights shall not
be converted into Bancshares Stock as provided in Paragraph 1.05.a.
above. However, if any shareholder of Triad who exercises Dissenters
Rights shall fail to perfect his or her right to receive cash as
provided above, or effectively shall waive or lose such right, then each
of his or her shares of Triad Stock, at Bancshares' sole option, shall
be deemed to have been converted into the right to receive Bancshares
Stock as of the Effective Time as provided in Paragraph 1.05.a. above.
Any shares of Bancshares Stock authorized to be issued pursuant to
this Agreement but not exchanged for shares of Triad Stock because of
the exercise of Dissenters Rights may be sold by the Exchange Agent at
public auction or by private sale, or through a dealer or by any
other reasonable method, at its election, for the best available
price, and the net proceeds of any such sale shall be retained by
Bancshares.
g. LOST CERTIFICATES. Any shareholder of
Triad whose certificate evidencing shares of Triad Stock has been lost,
destroyed, stolen or otherwise is missing shall be entitled to receive a
certificate representing the shares of Bancshares Stock to which he or
she is entitled in accordance with and upon compliance with conditions
imposed by the Exchange Agent or Bancshares pursuant to the provisions
of N.C. GEN. STAT. (section mark) 25-8-405 and N.C. GEN. STAT. (section
mark) 25-8-104 (including without limitation a requirement that the
shareholder provide a lost instruments indemnity or surety bond in form,
substance and amount satisfactory to the Exchange Agent and Bancshares).
5
<PAGE>
h. TREATMENT OF TRIAD'S STOCK OPTIONS. At the
Effective Time, each option previously granted by Triad to purchase
shares of Triad Stock and which is outstanding on the date of this
Agreement automatically shall be converted into an option to purchase
a number of shares of Bancshares Stock equal to the number of shares
of Triad Stock originally covered by the option multiplied by the
Exchange Rate (rounded to the nearest whole share); provided, however,
in no event shall options to purchase more than 162,579 shares of
Triad Stock be converted into options to purchase Bancshares Stock.
The purchase or exercise price of each share of Bancshares Stock under
each such option shall be equal to the per share purchase or exercise
price of Triad Stock previously covered by such option divided by the
Exchange Rate (and rounded to the nearest cent). All other terms of
each such stock option shall apply to the purchase of Bancshares Stock
thereunder and shall be unaffected by the Merger or conversion,
including but not limited to stock appreciation rights, exercise
and vesting provisions of each such stock option except that the
Merger will trigger the immediate vesting provisions of each such
option in accordance with the terms of each such option.
i. OUTSTANDING BANCSHARES AND UCB STOCK. The
status of the shares of Bancshares Stock and the shares of the capital
stock of UCB which are outstanding immediately prior to the Effective
Time shall not be affected by the Merger.
1.06. ARTICLES, BY-LAWS AND MANAGEMENT. The
Articles of Incorporation and By-Laws of UCB in effect at the Effective
Time shall be the Articles of Incorporation and By-Laws of UCB as
the surviving corporation. The officers and directors of UCB in office
at the Effective Time shall continue to hold such offices until
removed as provided by law or until the election or appointment of their
respective successors.
1.07. CLOSING; ARTICLES OF MERGER; EFFECTIVE TIME. The
closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Ward and Smith, P.A. in
Raleigh, North Carolina, or at such other place as Bancshares shall
designate, on a date specified by Bancshares (the "Closing Date")
after the expiration of any and all required waiting periods
following the effective date of required approvals of the Merger by
governmental or regulatory authorities (but in no event more than
thirty (30) days following the expiration of all such required
waiting periods). At the Closing, Bancshares, UCB and Triad shall
take such actions (including without limitation the delivery of certain
closing documents) as are required herein and as shall otherwise be
required by law to consummate the Merger and cause it to become
effective, and shall execute Articles of Merger under North Carolina
law which shall contain a "Plan of Merger" substantially in the form
attached as Schedule A hereto.
Subject to the terms and conditions set forth herein (including
without limitation the receipt of all required approvals of government
and regulatory authorities), the Merger shall be
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effective on the date and at the time (the "Effective Time")
designated in the Articles of Merger executed at the Closing and filed
with the North Carolina Secretary of State in accordance with law;
provided, however, that the date and time so specified as the
Effective Time shall in no event be more than ten days following the
Closing Date. If the Articles of Merger do not designate a date or
specific time as the Effective Time, then the Effective Time shall be
that date and time when the Articles of Merger are properly filed with
the North Carolina Secretary of State.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF TRIAD
Except as otherwise specifically provided herein or as
"Previously Disclosed" (as defined in Paragraph 10.01. below) to UCB,
Triad hereby makes the following representations and warranties to UCB
and Bancshares.
2.01. ORGANIZATION; STANDING; POWER. Triad (i)
is duly organized and incorporated, validly existing and in good
standing as a banking corporation under the laws of North Carolina;
(ii) has all requisite power and authority (corporate and other) to
own, lease and operate its properties and to carry on its business as
now being conducted; (iii) is duly qualified to do business and is
in good standing in each other jurisdiction in which the
character of the properties owned, leased or operated by it therein or
in which the transaction of its business makes such qualification
necessary, except where failure so to qualify would not have a material
adverse effect on Triad; and, (iv) is not transacting business or
operating any properties owned or leased by it in violation of any
provision of federal or state law or any rule or regulation
promulgated thereunder, which violation would have a material adverse
effect on Triad.
2.02. CAPITAL STOCK. Triad's authorized
capital stock consists of 4,000,000 shares of common stock, $2.50 par
value per share. As of the date of this Agreement, 1,818,623 shares of
Triad Stock are issued and outstanding, which constitute Triad's only
issued and outstanding securities.
The Subsidiary's authorized capital stock consists of
100,000 shares of common stock, $1.00 par value per share
("Subsidiary Stock") of which 10,000 shares are issued and outstanding
and constitute the Subsidiary's only outstanding securities. All
outstanding shares of Subsidiary Stock are owned of record and
beneficially by Triad.
Each outstanding share of Triad Stock and
Subsidiary Stock, respectively, (i) has been duly authorized and is
validly issued and outstanding, and is fully paid and
nonassessable (except to the extent assessable under applicable
North Carolina banking law), (ii) has not been issued in violation of
the preemptive rights of any shareholder, and (iii) has been issued
pursuant to and in compliance with the requirement of an applicable
exemption
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from registration requirements under the Securities Act of 1933, as
amended (the "1933 Act").
2.03. PRINCIPAL SHAREHOLDERS. No person
or entity is known to Triad to beneficially own, directly or indirectly,
more than 5% of the outstanding shares of Triad Stock.
2.04. SUBSIDIARIES. Triad is the record
and beneficial owner of all of the issued and outstanding shares of
Subsidiary Stock. Otherwise, neither Triad nor the Subsidiary has any
subsidiary (direct or indirect), nor owns any stock or other equity
interest in any corporation, service corporation, joint venture,
partnership or other entity.
2.05. CONVERTIBLE SECURITIES, OPTIONS,
ETC.. With the exception of options to purchase an aggregate of 162,579
shares of Triad Stock which have been issued and are outstanding under
Triad's Stock Options Policy for Non-Employee Directors and Triad's
Employees' Stock Option Plan and shares to be issued pursuant to the
Directors Deferred Compensation Plan, neither Triad nor the Subsidiary
has any outstanding (i) securities or other obligations (including
debentures or other debt instruments) which are convertible into shares
of Triad Stock or Subsidiary Stock or any other securities of Triad or
the Subsidiary, (ii) options, warrants, rights, calls or other
commitments of any nature which entitle any person to receive or acquire
any shares of Triad Stock or Subsidiary Stock or any other securities of
Triad or the Subsidiary, or (iii) plan, agreement or other arrangement
pursuant to which shares of Triad Stock or Subsidiary Stock or any other
securities of Triad or the Subsidiary, or options, warrants, rights,
calls or other commitments of any nature pertaining thereto, have been
or may be issued.
2.06. AUTHORIZATION AND VALIDITY OF
AGREEMENT. This Agreement has been duly and validly approved by Triad's
Board of Directors and executed and delivered on Triad's behalf. Subject
only to approval of this Agreement by the shareholders of Triad in the
manner required by law (as contemplated by Paragraph 6.01.a. below), (i)
Triad has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations and agreements and carry out
the transactions described herein, (ii) all corporate proceedings and
approvals required to authorize Triad to enter into this Agreement and
to perform its obligations and agreements and carry out the transactions
described herein have been duly and properly completed or obtained, and
(iii) this Agreement has been executed on behalf of Triad and
constitutes a valid and binding agreement of Triad enforceable in
accordance with its terms (except to the extent enforceability may be
limited by (A) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect which affect
creditors' rights generally, (B) by legal and equitable limitations on
the availability of injunctive relief, specific performance and other
equitable remedies, and (C) general principles of equity and
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applicable laws or court decisions limiting the enforceability of
indemnification provisions).
2.07. VALIDITY OF TRANSACTIONS; ABSENCE OF
REQUIRED CONSENTS OR WAIVERS. Except where the same would not have a
material adverse effect on Triad and the Subsidiary considered as one
enterprise, neither the execution and delivery of this Agreement, nor
the consummation of the transactions described herein, nor compliance by
Triad with any of its obligations or agreements contained herein,
will: (i) conflict with or result in a breach of the terms and
conditions of, or constitute a default or violation under any
provision of, Triad's Articles of Incorporation or Bylaws, or any
contract, agreement, lease, mortgage, note, bond, indenture, license,
or obligation or understanding (oral or written) to which Triad or the
Subsidiary is bound or by which it, its business, capital stock or any
of its properties or assets may be affected; (ii) result in the
creation or imposition of any lien, claim, interest, charge,
restriction or encumbrance upon any of Triad's or the
Subsidiary's properties or assets; (iii) violate any applicable federal
or state statute, law, rule or regulation, or any judgment, order,
writ, injunction or decree of any court, administrative or regulatory
agency or governmental body; (iv) result in the acceleration of any
obligation or indebtedness of Triad or the Subsidiary; or, (v)
interfere with or otherwise adversely affect Triad's or the Subsidiary's
ability to carry on its business as presently conducted, or interfere
with or otherwise adversely affect the ability of Bancshares or UCB to
carry on such business after the Effective Time.
No consents, approvals or waivers are required to be
obtained from any person or entity in connection with Triad's execution
and delivery of this Agreement, or the performance of its
obligations or agreements or the consummation of the transactions
described herein, except for required approvals of Triad's shareholders
as described in Paragraph 7.01.c. below and of governmental or
regulatory authorities as described in Paragraph 7.01.a. below.
2.08. TRIAD BOOKS AND RECORDS. Triad's and the
Subsidiary's books of account and business records have been
maintained in substantial compliance with all applicable legal and
accounting requirements and in accordance with good business
practices, and such books and records are complete and reflect
accurately in all material respects Triad's and the Subsidiary's
respective items of income and expense and all of their respective
assets, liabilities and stockholders' equity. The minute books of
Triad and the Subsidiary accurately reflect in all material respects
the corporate actions which their respective shareholders and board of
directors, and all committees thereof, have taken during the time
periods covered by such minute books. All such minute books have
been or will be made available to UCB and its representatives.
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2.09. TRIAD REPORTS. Since January 1,
1990, and where the failure to file has had or could have a material and
adverse effect on Triad and the Subsidiary considered as one enterprise,
Triad and the Subsidiary each has filed all reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that were required to be filed with (i) the Federal
Deposit Insurance Corporation (the "FDIC"), (ii) the North Carolina
Commissioner of Banks (the "Commissioner"), or (iii) any other
governmental or regulatory authorities having jurisdiction over Triad or
the Subsidiary. All such reports, registrations and statements filed by
Triad with the FDIC, the Commissioner or other such regulatory
authority are collectively referred to herein as the "Triad Reports."
As of their respective dates, each Triad Report complied in all
material respects with all the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which it was
filed and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
neither Triad nor the Subsidiary has been notified that any such Triad
Report was deficient in any material respect as to form or
content. Following the date of this Agreement, Triad shall deliver
to Bancshares, simultaneous with the filing thereof, a copy of each
report, registration, statement or other regulatory filing made by it
or the Subsidiary with the FDIC, the Commissioner or any other such
regulatory authority.
The Triad Stock is registered under the Securities
Exchange Act of 1934 (the "Exchange Act"); Triad is subject to the
periodic reporting requirements of the Exchange Act.
2.10. TRIAD FINANCIAL STATEMENTS. Triad has delivered
to UCB a copy of (i) its balance sheets as of December 31, 1993 and
December 31, 1994, and its statements of operations, changes in
stockholders' equity and cash flows for the years ended December 31,
1992, December 31, 1993 and December 31, 1994, together with notes
thereto (the "Triad Financial Statements"), and (ii) a copy of its
balance sheet as of June 30, 1995 and its statement of operations for
the six months ended June 30, 1995 (the "Triad Interim Financial
Statements"); and, following the date of this Agreement, Triad
promptly will deliver to UCB all other annual or interim financial
statements prepared by or for Triad. The Triad Financial Statements and
Triad Interim Financial Statements (including any related notes and
schedules thereto) (i) are in accordance with Triad's books and
records, and (ii) were prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods indicated and present fairly in all material
respects Triad's financial condition, assets and liabilities,
results of operations, changes in stockholders' equity and changes
in cash flows as of the dates indicated and for the periods specified
therein. The Triad Financial Statements have been audited and certified
by Triad's independent certified public accountants, KPMG Peat
Marwick, LLP.
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2.11. TAX RETURNS AND OTHER TAX MATTERS.
(i) Triad and the Subsidiary each has timely filed or caused to be
filed all federal, state and local tax returns and reports which are
required by law to have been filed, and, to the best knowledge and
belief of management of Triad, all such returns and reports were true,
correct and complete and contained all material information required to
be contained therein; (ii) all federal, state and local income, profits,
franchise, sales, use, occupation, property, excise and other taxes
(including interest and penalties), charges and assessments which have
become due from or been assessed or levied against Triad or the
Subsidiary or their property have been become fully paid, and, with
respect to any such taxes to become due from Triad or the Subsidiary for
any period or periods through and including June 30, 1995, adequate
provision has been made for the payment of all such taxes and such
provision is reflected in the Triad Interim Financial Statements; (iii)
Triad's and the Subsidiary's tax returns and reports have been
examined or closed by applicable statutes of limitations through the tax
year ended December 31, 1991, and neither Triad nor the Subsidiary has
received any indication of the pendency of any audit or examination in
connection with any tax return or report and has no knowledge that any
such return or report is subject to adjustment; and (iv) Triad has not
executed any waiver or extended the statute of limitations (or been
asked to execute a waiver or extend a statute of limitation) with
respect to any tax year, the audit of any tax return or report or the
assessment or collection of any tax. Any deferred taxes of Triad or the
Subsidiary have been provided for in the Triad Financial Statements
and Triad Interim Financial Statements in all material respects.
2.12. ABSENCE OF MATERIAL ADVERSE CHANGES
OR CERTAIN OTHER EVENTS.
(i) Since December 31, 1994,
Triad and the Subsidiary each has conducted its business only in the
ordinary course, and there has been no material adverse change, and
there has occurred no event or development and, to the best knowledge
of management of Triad, there currently exists no condition or
circumstance which, with the lapse of time or otherwise, may or could
cause, create or result in a material adverse change, in or
affecting the financial condition of Triad or the Subsidiary or in its
results of operations, prospects, business, assets, loan
portfolio, investments, properties or operations.
(ii) Since December 31, 1994, and
other than in the ordinary course of its business, neither Triad
nor the Subsidiary has incurred any material liability or engaged
in any material transaction or entered into any material agreement,
increased the salaries, compensation or general benefits payable to
its employees, suffered any loss, destruction or damage to any of its
properties or assets, or made a material acquisition or disposition
of any assets or entered into any material contract or lease.
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2.13. ABSENCE OF UNDISCLOSED LIABILITIES.
Neither Triad nor the Subsidiary has any liabilities or obligations,
whether known or unknown, matured or unmatured, accrued, absolute,
contingent or otherwise, whether due or to become due (including without
limitation tax liabilities or unfunded liabilities under employee
benefit plans or arrangements), other than (i) those reflected in Triad
Interim Financial Statements, or (ii) obligations or liabilities
incurred in the ordinary course of their business since June 30, 1995
and which are not, individually or in the aggregate, material to Triad.
2.14. COMPLIANCE WITH EXISTING
OBLIGATIONS. Triad and the Subsidiary each has performed in all
material respects all obligations required to be performed by it under,
and it is not in default in any respect under, or in violation in any
respect of, the terms and conditions of its Articles of Incorporation or
Bylaws, and/or any contract, agreement, lease, mortgage, note, bond,
indenture, license, obligation, understanding or other undertaking
(whether oral or written) to which Triad or the Subsidiary is bound or
by which it, its business, capital stock or any of its properties or
assets may be affected.
2.15. LITIGATION AND COMPLIANCE WITH LAW.
(i) There are no actions, suits,
arbitrations, controversies or other proceedings or investigations (or,
to the best knowledge and belief of management of Triad or the
Subsidiary, any facts or circumstances which reasonably could result in
such), including without limitation any such action by any
governmental or regulatory authority, which currently exists or is
ongoing, pending or, to the best knowledge and belief of management of
Triad or the Subsidiary threatened, contemplated or probable of
assertion, against, relating to or otherwise affecting Triad or the
Subsidiary or any of their properties or assets which, if determined
adversely, could result in liability on the part of Triad or the
Subsidiary for, or subject it to, monetary damages, fines or penalties,
or an injunction, and which could have a material adverse effect on
Triad's financial condition, results of operations, prospects,
business, assets, loan portfolio, investments, properties or
operations or on the ability of Triad to consummate the Merger;
(ii) Triad and the Subsidiary
each has all licenses, permits, orders, authorizations or approvals
("Permits") of any federal, state, local or foreign governmental or
regulatory body that are material to or necessary for the conduct of
its business or to own, lease and operate its properties; all such
Permits are in full force and effect; no violations are or have been
recorded in respect of any such Permits; and no proceeding is
pending or, to the best knowledge of management of Triad and the
Subsidiary, threatened or probable of assertion to suspend, cancel,
revoke or limit any Permit;
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(iii) Neither Triad nor the
Subsidiary is subject to any supervisory agreement, enforcement
order, writ, injunction, capital directive, supervisory directive,
memorandum of understanding or other similar agreement, order,
directive, memorandum or consent of, with or issued by any regulatory or
other governmental authority (including without limitation the FDIC or
the Commissioner) relating to its financial condition, directors or
officers, operations, capital, regulatory compliance or otherwise;
there are no judgments, orders, stipulations, injunctions, decrees or
awards against Triad or the Subsidiary which in any manner limit,
restrict, regulate, enjoin or prohibit any present or past business or
practice of Triad or the Subsidiary; and neither Triad nor the
Subsidiary has been advised or has no reason to believe that any
regulatory or other governmental authority or any court is
contemplating, threatening or requesting the issuance of any such
agreement, order, injunction, directive, memorandum, judgment,
stipulation, decree or award; and,
(iv) Neither Triad nor the
Subsidiary is in violation or default in any material respect under, and
each has complied in all material respects with, all laws, statutes,
ordinances, rules, regulations, orders, writs, injunctions or decrees
of any court or federal, state, municipal or other governmental or
regulatory authority having jurisdiction or authority over it or its
business operations, properties or assets (including without
limitation all provisions of North Carolina law relating to usury, the
Consumer Credit Protection Act, and all other laws and regulations
applicable to extensions of credit by Triad) and there is no basis for
any claim by any person or authority for compensation, reimbursement
or damages or otherwise for any violation of any of the foregoing that
would have any material adverse effect on the financial condition of
Triad and the Subsidiary considered as one enterprise.
2.16. REAL PROPERTIES. Triad has Previously Disclosed
to UCB a listing of all real property owned or leased by Triad or
the Subsidiary (including Triad's banking facilities and all other
real estate or foreclosed properties owned by Triad) (the "Real
Property") and all leases, if any, pertaining to any such Real
Property to which Triad or the Subsidiary is a party (the "Real Property
Leases"). With respect to all Real Property owned by Triad, Triad has
good and marketable fee simple title to such Real Property and owns
the same free and clear of all mortgages, liens, leases,
encumbrances, title defects and exceptions to title other than (i) the
lien of current taxes not yet due and payable, and (ii) such
imperfections of title and restrictions, covenants and easements
(including utility easements) which do not affect materially the
value of the Real Property and which do not and will not
materially detract from, interfere with or restrict the present or
future use of the properties subject thereto or affected thereby. With
respect to each Real Property Lease (i) such lease is valid and
enforceable in accordance with its terms, (ii) there currently
exists no circumstance or condition which constitutes an event of
default by Triad or its lessor or which, with the passage
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of time or the giving of required notices will or could constitute such
an event of default, and (iii) subject to any required consent of
Triad's lessor, each such Real Property Lease may be assigned to UCB
and the execution and delivery of this Agreement does not
constitute an event of default thereunder.
To the best of the knowledge and belief of
management of Triad, the Real Property complies in all material
respects with all applicable federal, state and local laws, regulations,
ordinances or orders of any governmental authority, including those
relating to zoning, building and use permits, and the Real Property
may be used under applicable zoning ordinances for commercial
banking facilities as a matter of right rather than as a conditional or
nonconforming use.
All improvements and fixtures included in or
on the Real Property are in good condition and repair, ordinary wear and
tear excepted, and there does not exist any condition which interferes
with Triad's (or will interfere with UCB's) use or affects the economic
value thereof.
2.17. LOANS, ACCOUNTS, NOTES AND OTHER
RECEIVABLES.
(i) All loans, accounts, notes and other
receivables reflected as assets on Triad's books and records (A) have
resulted from bona fide business transactions in the ordinary
course of Triad's operations, (B) in all material respects were made
in accordance with Triad's standard loan policies and procedures, and
(C) are owned by Triad free and clear of all liens, encumbrances,
assignments, participation or repurchase agreements or other exceptions
to title or to the ownership or collection rights of any other person
or entity.
(ii) All records of Triad regarding all
outstanding loans, accounts, notes and other receivables, and all
other real estate owned, are accurate in all material respects, and,
with respect to each loan which Triad's loan documentation indicates is
secured by any real or personal property or property rights ("Loan
Collateral"), such loan is secured by valid, perfected and enforceable
liens on all such Loan Collateral having the priority described in
Triad's records of such loan.
(iii) To the best knowledge of management
of Triad, each loan reflected as an asset on Triad's books, and each
guaranty therefor, is the legal, valid and binding obligation of the
obligor or guarantor thereon, and no defense, offset or counterclaim
has been asserted with respect to any such loan or guaranty.
(iv) Triad has Previously Disclosed to
UCB a listing of (A) each loan, extension of credit or other asset
of Triad which, as of September 30, 1995, is classified by the FDIC,
the Administrator or by Triad as "Loss", "Doubtful", "Substandard" or
"Special Mention" (or otherwise by words of similar import), or which
Triad has designated as a special asset or for special
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handling or placed on any "watch list" because of concerns
regarding the ultimate collectibility or deteriorating condition of
such asset or any obligor or Loan Collateral therefor, and (B) each
loan or extension of credit of Triad which, as of September 30, 1995,
was past due as to the payment of principal and/or interest, or as to
which any obligor thereon (including the borrower or any guarantor)
otherwise was in default, is the subject of a proceeding in
bankruptcy or otherwise has indicated any inability or intention not
to repay such loan or extension of credit. Each such listing is
accurate and complete as of the date indicated.
(v) To the best knowledge and belief of
Triad's management, each of Triad's loans and other extensions of
credit (with the exception of those loans and extensions of credit
specified in the written listings described in Subparagraph (iv)
above) is collectible in the ordinary course of Triad's business in an
amount which is not less than the amount at which it is carried on
Triad's books and records.
(vi) Triad's reserve for possible loan
losses (the "Loan Loss Reserve") shown in the Triad Interim Financial
Statements has been established in conformity with GAAP, sound banking
practices and all applicable requirements of the FDIC and rules and
policies of the Commissioner and, in the best judgment of Triad's
management, is reasonable in view of the size and character of
Triad's loan portfolio, current economic conditions and other
relevant factors, and is adequate to provide for losses relating to or
the risk of loss inherent in Triad's loan portfolio and other real
estate owned.
2.18. SECURITIES PORTFOLIO AND
INVESTMENTS. All securities owned by Triad or the Subsidiary (whether
owned of record or beneficially) are held free and clear of all
mortgages, liens, pledges, encumbrances or any other restriction or
rights of any other person or entity, whether contractual or statutory,
which would materially impair the ability of Triad or the Subsidiary to
dispose freely of any such security and/or otherwise to realize the
benefits of ownership thereof at any time (other than pledges of
securities in the ordinary course of Triad's business to secure public
funds deposits). There are no voting trusts or other agreements or
undertakings to which Triad or the Subsidiary is a party with respect to
the voting of any such securities. With respect to all "repurchase
agreements" to which Triad or the Subsidiary has "purchased" securities
under agreement to resell (if any), Triad or the Subsidiary has a valid,
perfected first lien or security interest in the government securities
or other collateral securing the repurchase agreement, and the value of
the collateral securing each such repurchase agreement equals or exceeds
the amount of the debt owed to Triad which is secured by such
collateral.
Except for fluctuations in the market values of United States
Treasury and agency or municipal securities, since June 30, 1995,
there has been no significant deterioration or material adverse
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change in the quality, or any material decrease in the value, of
Triad's or the Subsidiary's securities portfolio.
2.19. PERSONAL PROPERTY AND OTHER ASSETS.
All assets of Triad and the Subsidiary (including without limitation all
banking equipment, data processing equipment, vehicles, and all other
personal property located in or used in the operation of each office of
Triad or the Subsidiary or otherwise used by Triad or the Subsidiary in
the operation of its business) are owned by Triad or the Subsidiary free
and clear of all liens, leases, encumbrances, title defects or
exceptions to title. All of Triad's banking equipment is in good
operating condition and repair, ordinary wear and tear excepted.
2.20. PATENTS AND TRADEMARKS. Triad and
the Subsidiary each owns, possesses or has the right to use any and all
patents, licenses, trademarks, trade names, copyrights, trade secrets
and proprietary and other confidential information necessary to conduct
its business as now conducted; and neither Triad nor the
Subsidiary has violated, and neither of them currently is in
conflict with, any patent, license, trademark, trade name,
copyright or proprietary right of any other person or entity.
2.21. ENVIRONMENTAL MATTERS. Triad has Previously
Disclosed and provided to UCB copies of all written reports,
correspondence, notices or other materials, if any, in its possession
pertaining to environmental reports, surveys, assessments, notices of
violation, notices of regulatory requirements, penalty assessments,
claims, actions or proceedings, past or pending, of the Real Property
or any of its Loan Collateral and any improvements thereon, or to any
violation of Environmental Laws (as defined below) on, affecting
or otherwise involving the Real Property, any Loan Collateral or
otherwise involving Triad or the Subsidiary.
To the best of the knowledge and belief of management of Triad:
(i) there has been no presence,
use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, reporting, testing,
processing, emission, discharge, release, threatened release, control
or clean-up, in a reportable or regulated quantity, of any hazardous,
toxic or otherwise regulated materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants,
toxic chemicals, oil or other petroleum products or byproducts,
asbestos or materials containing (or presumed to contain)
asbestos, polychlorinated biphenyls, or radioactive materials,
and/or any hazardous, toxic, regulated or dangerous waste, substance
or material defined as such by the United States Environmental
Protection Agency or any other federal, state or local government or
agency or political subdivision thereof, or for the purpose of any
Environmental Laws (as defined herein), as may now or hereafter
(through the Effective Time) be defined or in
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effect ("Hazardous Substances") by any person on, from or relating to
any parcel of the Real Property;
(ii) neither Triad nor the
Subsidiary has violated any federal, state or local law, rule,
regulation, order, permit or other requirement relating to health,
safety or the environment or imposing liability, responsibility or
standards of conduct applicable to environmental conditions (all such
laws, rules, regulations, orders and other requirements being herein
collectively referred to as "Environmental Laws"), and there has been
no violation of any Environmental Laws (including any violation
with respect to or relating to any Loan Collateral) by any other person
or entity for whose liability or obligation with respect to any
particular matter or violation Triad or the Subsidiary is or may be
responsible or liable;
(iii) neither Triad nor the
Subsidiary is subject to any claims, demands, causes of action, suits,
proceedings, losses, damages, penalties, liabilities, obligations,
costs or expenses of any kind and nature which arise out of, under or in
connection with, or which result from or are based upon the
presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, reporting,
testing, processing, emission, discharge, release, threatened release,
control or clean-up of any Hazardous Substances on, from or relating to
the Real Property or any Loan Collateral, by Triad or the Subsidiary
or any other person or entity; and,
(iv) no facts, events or
conditions relating to the Real Property or any Loan Collateral, or
the operations of Triad or the Subsidiary at any of its office
locations, will prevent, hinder or limit continued compliance with
Environmental Laws, or give rise to any investigatory, remedial or
corrective actions, obligations or liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to
Environmental Laws.
For purposes of this Agreement, "Environmental
Laws" shall include:
(i) all federal, state and local
statutes, regulations, ordinances, orders, decrees, and similar
provisions having the force or effect of law,
(ii) all contractual agreements, and
(iii) all common law,
concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without
limitation all standards of conduct and bases of obligations relating
to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution,
labeling, reporting, testing, processing, discharge, release,
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threatened release, control or clean-up of any Hazardous Substances
(including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act, the Superfund Amendment and
Reauthorization Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Clean Water Act, the Clean
Air Act, the Toxic Substances Control Act, the Oil Pollutant Act, the
Coastal Zone Management Act, any "Superfund" or "Superlien" law, the
North Carolina Oil Pollution and Hazardous Substances Control Act, the
North Carolina Water and Air Resources Act and the North Carolina
Occupational Safety and Health Act, including any amendments thereto
from time to time) as such may now or hereafter (through the Effective
Time) be defined or in effect.
2.22. ABSENCE OF BROKERAGE OR FINDERS
COMMISSIONS. (i) All negotiations relative to this Agreement and the
transactions described herein have been carried on by Triad directly
with UCB and Bancshares; (ii) no person or firm has been retained by or
has acted on behalf of, pursuant to any agreement, arrangement or
understanding with, or under the authority of, Triad or its Board of
Directors, as a broker, finder or agent or has performed similar
functions or otherwise is or may be entitled to receive or claim a
brokerage fee or other commission in connection with the transactions
described herein; and, (iii) Triad has not agreed to pay any brokerage
fee or other commission to any person or entity in connection with the
transactions described herein.
2.23. MATERIAL CONTRACTS. Except for leases on
Triad's branch offices, neither Triad nor the Subsidiary is a party
to or bound by any agreement involving money or other property in
an amount or with a value in excess of $50,000 (i) which is not to be
performed in full prior to December 31, 1995, (ii) which calls for the
provision of goods or services to Triad or the Subsidiary and cannot be
terminated without material penalty upon written notice to the other
party thereto, (iii) which is material to Triad and was not entered into
in the ordinary course of business, (iv) which involves hedging, options
or any similar trading activity, or interest rate exchanges or swaps,
(v) which commits Triad or the Subsidiary to extend any loan or credit
(with the exception of letters of credit, lines of credit and loan
commitments extended in the ordinary course of Triad's business),
(vi) which involves the purchase or sale of any assets of Triad or the
Subsidiary, or the purchase, sale, issuance, redemption or transfer
of any capital stock or other securities of Triad or the Subsidiary, or
(vii) with any director, officer or principal shareholder of Triad
or the Subsidiary (including without limitation any employment
or consulting agreement, but not including any agreement relating to
loans or other banking services which were made in the ordinary course
of Triad's business and on substantially the same terms and conditions
as were prevailing at that time for similar agreements with unrelated
persons).
Neither Triad nor the Subsidiary is in default in any
material respect, and there has not occurred any event which with
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the lapse of time or giving of notice or both would constitute such a
default, under any contract, lease, insurance policy, commitment or
arrangement to which it is a party or by which it or its property is or
may be bound or affected or under which it or its property receives
benefits, where the consequences of such default would have a material
adverse effect on the financial condition, results of operations,
prospects, business, assets, loan portfolio, investments,
properties or operations of Triad.
2.24. EMPLOYMENT MATTERS; EMPLOYEE RELATIONS. Triad
and the Subsidiary each (i) has paid in full to or accrued on
behalf of all its directors, officers and employees all wages,
salaries, commissions, bonuses, fees, sick pay, severance pay, all
other amounts promised to the extent required by law or when Triad has
a policy of making such payments and other direct compensation for
all services performed by them to the date of this Agreement and (ii)
is in compliance with all federal, state and local laws, statutes,
rules and regulations with regard to employment and employment
practices, terms and conditions, and wages and hours and other
compensation matters; and, no person has, to the knowledge of
management of Triad or the Subsidiary, asserted that Triad or the
Subsidiary is liable in any amount for any arrearages in wages or
employment taxes or for any penalties for failure to comply with any of
the foregoing.
There is no action, suit or proceeding by any
person pending or, to the best knowledge of management of Triad or
the Subsidiary, threatened, against Triad or the Subsidiary (or any of
its employees), involving employment discrimination, sexual
harassment, wrongful discharge or similar claims.
Neither Triad nor the Subsidiary is a party
to or bound by any collective bargaining agreement with any of its
employees, any labor union or any other collective bargaining unit or
organization. There is no pending or threatened labor dispute, work
stoppage or strike involving Triad or the Subsidiary and any of its
employees, or any pending or threatened proceeding in which it is
asserted that Triad or the Subsidiary has committed an unfair labor
practice; and neither Triad nor the Subsidiary is aware of any
activity involving it or any of its employees seeking to certify a
collective bargaining unit or engaging in any other labor organization
activity.
2.25. EMPLOYMENT AGREEMENTS; EMPLOYEE
BENEFIT PLANS.
(i) Neither Triad nor the Subsidiary is
a party to or bound by any employment agreements with any of its
directors, officers or employees.
(ii) Triad has Previously Disclosed to
UCB a listing of all bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock and stock
option plans; all employment and severance contracts; all medical,
dental, health,
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and life insurance plans; all vacation, sickness, disability and death
benefit plans; and all other employee benefit plans, contracts, or
arrangements maintained or contributed to by Triad or the
Subsidiary for the benefit of any employees, former employees,
directors, former directors or any of their beneficiaries (collectively,
the "Plans"). True and complete copies of all Plans, including, but
not limited to, any trust instruments and/or insurance contracts, if
any, forming a part thereof, and all amendments thereto, previously
have been supplied to UCB. Except as Previously Disclosed to UCB,
neither Triad nor the Subsidiary maintains, sponsors, contributes
to or otherwise participates in any "Employee Benefit Plan" within the
meaning of (section mark) 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), any "Multiemployer Plan"
within the meaning of (section mark) 3(37) of ERISA, or any "Multiple
Employer Welfare Arrangement" within the meaning of (section
mark)(section mark) 3(40) of ERISA. Each Plan which is an "employee
pension benefit plan" within the meaning of (section mark) 3(2) of ERISA
and which is intended to be qualified under (section mark) 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code") has
received a favorable determination letter from the Internal Revenue
Service, and neither Triad nor the Subsidiary is aware of any
circumstances reasonably likely to result in the revocation or denial
of any such favorable determination letter. All reports and returns
with respect to the Plans (and any Plans previously maintained by
Triad or the Subsidiary) required to be filed with any governmental
department, agency, service or other authority, including without
limitation Internal Revenue Service Form 5500 (Annual Report), have been
properly and timely filed.
(iii) All "Employee Benefit Plans"
maintained by or otherwise covering employees or former employees of
Triad or the Subsidiary, to the extent subject to ERISA, currently
are, and at all times have been, in compliance with all material
provisions and requirements of ERISA. There is no pending or
threatened litigation relating to any Plan or any such Plan
previously maintained by Triad or the Subsidiary. Neither Triad
nor the Subsidiary has engaged in a transaction with respect to
any Plan that could subject Triad or the Subsidiary to a tax or penalty
imposed by either (section mark) 4975 of the Code, or (section mark)
502(i) of ERISA.
(iv) Triad has delivered to UCB a true,
correct and complete copy (including copies of all amendments thereto)
of the Triad Savings Plus Plan (the "Savings Plan") and the Triad
Defined Benefit Pension Plan (the "Pension Plan"), together with true,
correct and complete copies of the summary plan descriptions relating
to the Savings Plan and the Pension Plan, the most recent determination
letter received from the Internal Revenue Service (the "IRS")
regarding the Savings Plan and the Pension Plan, and the most recent
Annual Report (Form 5500 series) and related schedules, if any, for the
Savings Plan and the Pension Plan.
The Savings Plan and the Pension Plan are
qualified under the provisions of (section mark) 401(a) of the Code,
the trusts under the Savings Plan and Pension Plan are exempt trusts
under (section mark) 501(a) of
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the Code, and Triad has received a determination letter with respect
to the Savings Plan and the Pension Plan to said effect, including a
determination letter covering the current terms and provisions of the
Savings Plan and the Pension Plan. There are no issues relating to said
qualification or exemption of the Savings Plan and the Pension Plan
currently pending before the IRS, the United States Department of
Labor, the Pension Benefit Guaranty Corporation or any court. The
Savings Plan and the Pension Plan and the administration thereof
meet (and have met since the establishment of the Savings Plan and
the Pension Plan) all of the applicable requirements of ERISA, the
Code and all other laws, rules and regulations applicable to the
Savings Plan and the Pension Plan and do not violate (and since the
establishment of the Savings Plan and the Pension Plan have not
violated) any of the applicable provisions of ERISA, the Code and such
other laws, rules and regulations. Without limiting the generality
of the foregoing, all reports and returns with respect to the
Savings Plan and the Pension Plan required to be filed with any
governmental department, agency, service or other authority have
been properly and timely filed. There are no issues or disputes with
respect to the Savings Plan and the Pension Plan or the administration
thereof currently existing between Triad, or any trustee or other
fiduciary thereunder, and any governmental agency, any current or former
employee of Triad or beneficiary of any such employee or any other
person or entity. No "reportable event" within the meaning of
Section 4043(b) of ERISA has occurred at any time with respect to the
Savings Plan or the Pension Plan.
(v) No liability under subtitle C or D
of Title IV of ERISA has been or is expected to be incurred by Triad or
the Subsidiary with respect to the Savings Plan or the Pension Plan
or with respect to any other ongoing, frozen or terminated defined
benefit pension plan currently or formerly maintained by Triad. Neither
Triad nor the Subsidiary presently contribute to a "multiemployer plan"
and has not contributed to such a plan within the five calendar
years since December 31, 1990. All contributions required to be made
under the terms of each of the Plans (including without limitation the
Savings Plan and the Pension Plan have been timely made. Neither the
Savings Plan nor the Pension Plan maintained by Triad or the
Subsidiary has an "accumulated funding deficiency" (whether or not
waived) within the meaning of (section mark) 412 of the Code or (section
mark) 302 of ERISA. Neither Triad nor the Subsidiary has provided, nor
is required to provide, security to any "pension plan" or to any
"single employer plan" pursuant to (section mark) 401(a)(29) of the
Code. Under the Savings Plan and the Pension Plan, as of the last day
of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit
liabilities," within the meaning of (section mark) 4001(a)(16) of
ERISA (as determined on the basis of the actuarial assumptions
contained in the plan's most recent actuarial valuation) did not
exceed the then current value of the assets of such plan, and there has
been no material change in the financial condition of any such plan
since the last day of the most recent plan year.
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(vi) There are no restrictions on the
rights of Triad to amend or terminate any Plan without incurring any
liability thereunder. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (except as otherwise specifically provided herein) (A) result in
any payment to any person (including without limitation any severance
compensation or payment, unemployment compensation, "golden
parachute" or "change in control" payment, or otherwise) becoming due
under any plan or agreement to any director, officer, employee or
consultant, (B) increase any benefits otherwise payable under any plan
or agreement, or (C) result in any acceleration of the time of payment
or vesting of any such benefit.
2.26. INSURANCE. Triad and the Subsidiary have in
effect a "banker's blanket bond" and such other policies of general
liability, casualty, directors and officers liability, employee
fidelity, errors and omissions and other property and liability
insurance as have been Previously Disclosed to UCB (the "Policies").
The Policies provide coverage in such amounts and against such
liabilities, casualties, losses or risks as is customary or
reasonable for entities engaged in Triad's or the Subsidiary's
businesses or as is required by applicable law or regulation; and, in
the reasonable opinion of management of Triad and the Subsidiary,
the insurance coverage provided under the Policies is considered
reasonable and adequate in all respects for Triad and the Subsidiary.
Each of the Policies is in full force and effect and is valid and
enforceable in accordance with its terms, and is underwritten by an
insurer of recognized financial responsibility and which is qualified
to transact business in North Carolina; and Triad and the Subsidiary
each has taken all requisite actions (including the giving of
required notices) under each such Policy in order to preserve all
rights thereunder with respect to all matters. Neither Triad nor the
Subsidiary is in default under the provisions of, has not received
notice of cancellation or nonrenewal of or any premium increase on, or
has any knowledge of any failure to pay any premium on or any inaccuracy
in any application for any Policy. There are no pending claims with
respect to any Policy (and neither Triad nor the Subsidiary is aware of
any facts which would form the basis of any such claim), and neither
Triad nor the Subsidiary has any knowledge of any state of facts or of
the occurrence of any event that is reasonably likely to form the basis
for any such claim.
2.27. INSURANCE OF DEPOSITS. All deposits of Triad are
insured by the Bank Insurance Fund of the FDIC to the maximum extent
permitted by law, all deposit insurance premiums due from Triad to the
FDIC have been paid in full in a timely fashion, and, to the best of
the knowledge and belief of Triad's executive officers, no
proceedings have been commenced or are contemplated by the FDIC or
otherwise to terminate such insurance.
2.28. AFFILIATES. Triad has Previously Disclosed
to UCB a listing of those persons deemed by Triad and its counsel as
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of the date of this Agreement to be "Affiliates" of Triad (as that
term is defined in Rule 405 promulgated under the Securities Act of
1933), including persons, trusts, estates, corporations or other
entities related to persons deemed to be Affiliates of Triad.
2.29. OBSTACLES TO REGULATORY APPROVAL, ACCOUNTING
TREATMENT OR TAX TREATMENT. To the best of the knowledge and belief of
management of Triad and the Subsidiary, there exists no fact or
condition (including Triad's record of compliance with the Community
Reinvestment Act) relating to Triad or the Subsidiary that may
reasonably be expected to (i) prevent or materially impede or delay
Bancshares, UCB or Triad from obtaining the regulatory approvals
required in order to consummate transactions described herein, (ii)
prevent the Merger from being treated as a "pooling of interests" for
accounting purposes, or (iii) prevent the Merger from qualifying to
be a tax-free reorganization under Section 368(a)(1)(A) of the Code;
and, if any such fact or condition becomes known to Triad, Triad shall
promptly (and in any event within three days after obtaining such
knowledge) communicate such fact or condition to the President of
Bancshares.
2.30. DISCLOSURE. To the best of the
knowledge and belief of Triad, no written statement, certificate,
schedule, list or other written information furnished by or on behalf of
Triad or the Subsidiary at any time to Bancshares or UCB in
connection with this Agreement (including without limitation
information "Previously Disclosed" by Triad), when considered as a
whole, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in
order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. Each
document delivered or to be delivered by Triad or the Subsidiary to
Bancshares or UCB is or will be a true and complete copy of such
document, unmodified except by another document delivered by Triad.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF
UCB AND BANCSHARES
Except as otherwise specifically described herein or as
"Previously Disclosed" (as defined in Paragraph 10.01. below) to
Triad, UCB and Bancshares each hereby makes the following
representations and warranties to Triad.
3.01. ORGANIZATION; STANDING; POWER. UCB and
Bancshares each (i) is duly organized and incorporated, validly
existing and in good standing (as a banking corporation and a business
corporation, respectively) under the laws of North Carolina, (ii) has
all requisite power and authority (corporate and other) to own its
respective properties and conduct its respective businesses as now
being conducted, (iii) is duly qualified to do business and is in good
standing in each other jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction
of its respective businesses makes such qualification necessary, except
where failure so to qualify would
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not have a material adverse effect on Bancshares and its
subsidiaries considered as one enterprise, and (iv) is not transacting
business, or operating any properties owned or leased by it, in
violation of any provision of federal or state law or any rule or
regulation promulgated thereunder, which violation would have a
material adverse effect on Bancshares and its subsidiaries
considered as one enterprise.
3.02. CAPITAL STOCK. Bancshares' authorized
capital stock consists of 40,000,000 shares of Bancshares Stock and
2,000,000 shares of no par Preferred Stock. As of the date of this
Agreement, an aggregate of 14,768,740 shares of Bancshares Stock
were issued and outstanding, and no shares of Preferred Stock were
issued or outstanding. Bancshares' outstanding capital stock has
been duly authorized and validly issued, and is fully paid and
nonassessable, and the shares of Bancshares Stock issued to Triad's
shareholders pursuant to this Agreement, when issued as described
herein, will be duly authorized, validly issued, fully paid and
nonassessable.
All outstanding shares of UCB's common stock ("UCB
Stock") have been validly issued and are owned by Bancshares.
3.03. AUTHORIZATION AND VALIDITY OF
AGREEMENT. This Agreement has been duly and validly approved by
BancShares' and UCB's Boards of Directors and executed and delivered on
BancShares' and UCB's behalf. (i) Bancshares and UCB each has the
corporate power and authority to execute and deliver this Agreement and
to perform its obligations and agreements and carry out the transactions
described herein, (ii) all corporate proceedings required to be taken
to authorize Bancshares and UCB to enter into this Agreement and
to perform its obligations and agreements and carry out the
transactions described herein have been duly and properly taken, and
(iii) this Agreement constitutes the valid and binding agreement of
Bancshares and UCB enforceable in accordance with its terms (except
to the extent enforceability may be limited by (A) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect which affect creditors' rights generally,
(B) by legal and equitable limitations on the availability of injunctive
relief, specific performance and other equitable remedies, and (C)
general principles of equity and applicable laws or court decisions
limiting the enforceability of indemnification provisions).
3.04. VALIDITY OF TRANSACTIONS; ABSENCE OF REQUIRED
CONSENTS OR WAIVERS. Except where the same would not have a material
adverse effect on Bancshares and its subsidiaries considered as one
enterprise, neither the execution and delivery of this Agreement,
nor the consummation of the transactions described herein, nor
compliance by Bancshares or UCB with any of its obligations or
agreements contained herein, will: (i) conflict with or result in a
breach of the terms and conditions of, or constitute a default or
violation under any provision of, Bancshares' or UCB's Articles of
Incorporation or Bylaws, or any contract, agreement,
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lease, mortgage, note, bond, indenture, license, or obligation or
understanding (oral or written) to which Bancshares or UCB is bound or
by which it, its business, capital stock or any of its properties
or assets may be affected; (ii) result in the creation or imposition of
any lien, claim, interest, charge, restriction or encumbrance upon
any of Bancshares' or UCB's properties or assets; (iii) violate any
applicable federal or state statute, law, rule or regulation, or any
order, writ, injunction or decree of any court, administrative or
regulatory agency or governmental body; (iv) result in the acceleration
of any obligation or indebtedness of Bancshares or UCB; or (v) interfere
with or otherwise adversely affect Bancshares' or UCB's ability to carry
on its business as presently conducted.
No consents, approvals or waivers are required to be
obtained from any person or entity in connection with Bancshares' or
UCB's execution and delivery of this Agreement, or the performance of
its obligations or agreements or the consummation of the transactions
described herein, except for the approval of the respective Boards
of Directors of Bancshares and UCB as described in Paragraph
7.01.c. below and required approvals of governmental or regulatory
authorities described in Paragraph 7.01.a. below.
3.05. BANCSHARES BOOKS AND RECORDS.
Bancshares' and UCB's books of account and business records have been
maintained in substantial compliance with all applicable legal and
accounting requirements and in accordance with good business practices,
and such books and records are complete and reflect accurately in all
material respects Bancshares' and UCB's respective items of income and
expense and all of their respective assets, liabilities and
stockholders' equity. The minute books of Bancshares and UCB accurately
reflect in all material respects the corporate actions which their
respective shareholders and board of directors, and all
committees thereof, have taken during the time periods covered by such
minute books. All such minute books have been or will be made
available to Triad and its representatives.
3.06. BANCSHARES REPORTS. Since January 1, 1990, and
where the failure to file has had or could have a material and
adverse effect on Bancshares and its subsidiaries considered as one
enterprise, Bancshares and its consolidated subsidiaries have filed all
reports, registrations and statements, together with any amendments
that were required to be made with respect thereto, that were required
to be filed with (i) the Securities and Exchange Commission (the
"SEC"), (ii) the Board of Governors of the Federal Reserve System
(the "FRB"), (iii) the FDIC, (iv) the Commissioner, and (v) any other
governmental or regulatory authorities having jurisdiction over
Bancshares or its subsidiaries. All such reports and statements filed
with the SEC, the FRB, the FDIC, the Commissioner or other such
regulatory authority are collectively referred to herein as the
"Bancshares Reports." As of their respective dates, the Bancshares
Reports complied in all material respects with all the statutes,
rules and regulations enforced or promulgated by the regulatory
authority with which they were filed
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and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading; and Bancshares has not
been notified that any such Bancshares Reports were deficient in any
material respect as to form or content. Following the date of this
Agreement, Bancshares shall deliver to Triad upon its request a copy of
any report, registration, statement or other regulatory filing made by
Bancshares or UCB with the SEC, the FRB, the FDIC, the Commissioner or
any other such regulatory authority.
3.07. BANCSHARES FINANCIAL STATEMENTS.
Bancshares has delivered to Triad (i) a copy of Bancshares' consolidated
balance sheets as of December 31, 1993 and December 31, 1994, and its
consolidated statements of income, changes in shareholders' equity, and
cash flows for the years ended December 31, 1992, December 31, 1993 and
December 31, 1994 (the "Bancshares Financial Statements"), and (ii) a
copy of Bancshares' balance sheet as of June 30, 1995 and its statement
of operations for the six months ended June 30, 1995 (the "Bancshares
Interim Financial Statements"). The Bancshares Financial Statements
were prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated and have been audited and certified by
Bancshares' independent accountants, KPMG Peat Marwick LLP, and both the
Bancshares Financial Statements and the Bancshares Interim Financial
Statements present fairly in all material respects Bancshares'
consolidated financial condition, assets and liabilities, results of
operations, changes in stockholders' equity and changes in cash flows
as of the dates and for the periods specified therein.
3.08. ABSENCE OF MATERIAL ADVERSE CHANGES.
Since June 30, 1995, there has been no material adverse change, and
there has occurred no event or development and, to the best knowledge of
management of Bancshares or UCB, there currently exists no condition or
circumstance which, with the lapse of time or otherwise, may or could
cause, create or result in a material adverse change, in or affecting
Bancshares' consolidated financial condition or results of operations,
or in its prospects, business, assets, loan portfolio, investments,
properties or operations.
3.09. LITIGATION AND COMPLIANCE WITH LAW.
(i) There are no actions, suits,
arbitrations, controversies or other proceedings or investigations (or,
to the best knowledge and belief of management of Bancshares or UCB, any
facts or circumstances which reasonably could result in such),
including without limitation any such action by any governmental or
regulatory authority, which currently exists or is ongoing, pending
or, to the best knowledge and belief of management of Bancshares
or UCB, threatened, contemplated or probable of assertion, against,
relating to or otherwise affecting Bancshares or UCB or any of their
properties or assets which, if determined adversely, could
26
<PAGE>
result in liability on the part of Bancshares or UCB for, or subject
it to, monetary damages, fines or penalties, an injunction, and
which could have a material adverse change, in or affecting Bancshares'
consolidated financial condition or results of operations, or in its
prospects, business, assets, loan portfolio, investments, properties
or operations or on the ability of Bancshares or UCB to consummate the
Merger;
(ii) Bancshares and UCB each has
all licenses, permits, orders, authorizations or approvals ("Permits")
of any federal, state, local or foreign governmental or regulatory
body that are material to or necessary for the conduct of its
business or to own, lease and operate its properties; all such
Permits are in full force and effect; no violations are or have been
recorded in respect of any such Permits; and no proceeding is pending
or, to the best knowledge of management of Bancshares or UCB,
threatened or probable of assertion to suspend, cancel, revoke or limit
any Permit;
(iii) neither Bancshares nor UCB
is subject to any supervisory agreement, enforcement order, writ,
injunction, capital directive, supervisory directive, memorandum of
understanding or other similar agreement, order, directive, memorandum
or consent of, with or issued by any regulatory or other governmental
authority (including without limitation the FDIC, the FRB or the
Commissioner) relating to its financial condition, directors or
officers, operations, capital, regulatory compliance or otherwise;
there are no judgments, orders, stipulations, injunctions, decrees or
awards against Bancshares or UCB which in any manner limit, restrict,
regulate, enjoin or prohibit any present or past business or practice
of Bancshares or UCB; and, neither Bancshares nor UCB has been advised
or has any reason to believe that any regulatory or other governmental
authority or any court is contemplating, threatening or requesting
the issuance of any such agreement, order, injunction, directive,
memorandum, judgment, stipulation, decree or award; and,
(iv) Neither Bancshares nor UCB
is in violation or default in any material respect under, and each has
complied in all material respects with, all laws, statutes, ordinances,
rules, regulations, orders, writs, injunctions or decrees of any court
or federal, state, municipal or other governmental or regulatory
authority having jurisdiction or authority over it or its business
operations, properties or assets (including without limitation all
provisions of North Carolina law relating to usury, the Consumer
Credit Protection Act, and all other laws and regulations applicable to
extensions of credit by UCB) and there is no basis for any claim by any
person or authority for compensation, reimbursement or damages or
otherwise for any violation of any of the foregoing that would have
any material effect on the consolidated financial condition of
Bancshares.
3.10. ENVIRONMENTAL MATTERS.
To the best of the knowledge and belief of management of Bancshares:
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(i) there has been no presence,
use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, reporting, testing,
processing, emission, discharge, release, threatened release, control
or clean-up in a reportable or regulated quantity of any Hazardous
Substances by any person on, from or relating to any of its real
property;
(ii) neither Bancshares nor UCB
has violated any Environmental Laws, and there has been no violation
of any Environmental Laws (including any violation with respect to
or relating to any loan collateral) by any other person or entity
for whose liability or obligation with respect to any particular matter
or violation Bancshares or UCB is or may be responsible or liable;
(iii) neither Bancshares nor UCB
is subject to any claims, demands, causes of action, suits,
proceedings, losses, damages, penalties, liabilities, obligations,
costs or expenses of any kind and nature which arise out of, under or
in connection with, or which result from or are based upon the
presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, reporting,
testing, processing, emission, discharge, release, threatened
release, control or clean-up of any Hazardous Substances on, from or
relating to its real property or any loan collateral, by Bancshares or
UCB or any other person or entity; and,
(iv) no facts, events or
conditions relating to its real property or any loan collateral, or the
operations of Bancshares or UCB at any of its office locations, will
prevent, hinder or limit continued compliance with Environmental
Laws, or give rise to any investigatory, remedial or corrective
actions, obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental Laws.
3.11. ABSENCE OF BROKERAGE OR FINDERS COMMISSIONS.
(i) All negotiations relative to this Agreement and the transactions
described herein have been carried on by Bancshares and UCB directly
with Triad; (ii) no person or firm has been retained by or has acted
on behalf of, pursuant to any agreement, arrangement or understanding
with, or under the authority of, Bancshares or UCB or their
respective Boards of Directors, as a broker, finder or agent or has
performed similar functions or otherwise is or may be entitled to
receive or claim a brokerage fee or other commission in connection
with the transactions described herein; and, (iii) neither Bancshares
nor UCB has agreed to pay any brokerage fee or other commission to
any person or entity in connection with the transactions described
herein.
3.12. EMPLOYEE BENEFIT PLANS.
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(i) Each plan of Bancshares or UCB which
is an "employee pension benefit plan" within the meaning of
(section mark) 3(2) of ERISA and which is intended to be qualified under
(section mark) 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code") has received a favorable determination letter from the
Internal Revenue Service, and neither Bancshares nor UCB is aware of
any circumstances reasonably likely to result in the revocation or
denial of any such favorable determination letter. All reports and
returns with respect to the Plans required to be filed with any
governmental department, agency, service or other authority, including
without limitation Internal Revenue Service Form 5500 (Annual Report),
have been properly and timely filed.
(ii) All "Employee Benefit Plans"
maintained by or otherwise covering employees or former employees of
Bancshares or UCB, to the extent subject to ERISA, currently are,
and at all times have been, in compliance with all material
provisions and requirements of ERISA. There is no pending or threatened
litigation relating to any plan maintained by Bancshares or UCB.
Neither Bancshares nor UCB has engaged in a transaction with respect to
any plan that could subject Bancshares or UCB to a tax or penalty
imposed by either (section mark) 4975 of the Code, or (section mark)
502(i) of ERISA.
(iii) Any 401(k) savings plan maintained
by Bancshares or UCB (a "UCB Savings Plan") is qualified under the
provisions of (section mark)(section mark) 401(a) of the Code, the
trust under the UCB Savings Plan is an exempt trust under (section mark)
501(a) of the Code, and Bancshares or UCB has received a determination
letter with respect to the UCB Savings Plan to said effect,
including a determination letter covering the current terms and
provisions of the UCB Savings Plan. There are no issues relating to
said qualification or exemption of the UCB Savings Plan currently
pending before the IRS, the United States Department of Labor, the
Pension Benefit Guaranty Corporation or any court. The UCB Savings Plan
and the administration thereof meet (and have met since the
establishment of the UCB Savings Plan) all of the applicable
requirements of ERISA, the Code and all other laws, rules and
regulations applicable to the UCB Savings Plan and do not violate (and
since the establishment of the UCB Savings Plan have not violated) any
of the applicable provisions of ERISA, the Code and such other laws,
rules and regulations. Without limiting the generality of the
foregoing, all reports and returns with respect to the UCB Savings
Plan required to be filed with any governmental department, agency,
service or other authority have been properly and timely filed. There
are no issues or disputes with respect to the UCB Savings Plan or
the administration thereof currently existing between Triad, or any
trustee or other fiduciary thereunder, and any governmental agency,
any current or former employee of Bancshares or UCB or beneficiary
of any such employee or any other person or entity. No "reportable
event" within the meaning of Section 4043(b) of ERISA has occurred at
any time with respect to the UCB Savings Plan.
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(iv) All contributions required to be
made under the terms of each of any plans (including without
limitation the UCB Savings Plan and any "pension plan" (as defined
in (section mark) 3(2) of ERISA) maintained by Bancshares or UCB)
have been timely made. Neither the Savings Plan nor any "pension
plan" maintained by Bancshares or UCB or has an "accumulated funding
deficiency" (whether or not waived) within the meaning of (section mark)
412 of the Code or (section mark)(section mark) 302 of ERISA. Under the
UCB Savings Plan and any "pension plan" maintained by Bancshares or
UCB, as of the last day of the most recent plan year ended prior to
the date hereof, the actuarially determined present value of all
"benefit liabilities," within the meaning of (section mark)
4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the plan's most recent actuarial valuation)
did not exceed the then current value of the assets of such plan, and
there has been no material change in the financial condition of any
such plan since the last day of the most recent plan year.
3.13. INSURANCE. Bancshares and UCB have in effect a
"banker's blanket bond" and such other policies of general liability,
casualty, directors and officers liability, employee fidelity,
errors and omissions and other property and liability insurance as
have been Previously Disclosed to Triad (the "UCB Policies"). The UCB
Policies provide coverage in such amounts and against such liabilities,
casualties, losses or risks as is customary or reasonable for entities
engaged in Bancshares' and UCB's businesses or as is required by
applicable law or regulation; and, in the reasonable opinion of
management of Bancshares and UCB, the insurance coverage provided
under the UCB Policies is considered reasonable and adequate for
Bancshares and UCB.
3.14. OBSTACLES TO REGULATORY APPROVAL, ACCOUNTING
TREATMENT OR TAX TREATMENT. To the best of the knowledge and belief
of the executive officers of Bancshares and UCB, no fact or condition
(including UCB's record of compliance with the Community Reinvestment
Act) relating to Bancshares or UCB exists that may reasonably be
expected to (i) prevent or materially impede or delay Bancshares, UCB
or Triad from obtaining the regulatory approvals required in order to
consummate the transactions described herein, (ii) prevent the
Merger from being treated as a "pooling of interests" for accounting
purposes, or (iii) prevent the Merger from qualifying to be a
tax-free reorganization under Section 368(a)(1)(A) of the Code; and,
if any such fact or condition becomes known to the executive officers
of Bancshares or UCB, it promptly (and in any event within three days
after obtaining such knowledge) shall communicate such fact or condition
to the Chairman of Triad.
3.15. DISCLOSURE. To the best of the knowledge and
belief of Bancshares and UCB, no written statement, certificate,
schedule, list or other written information furnished by or on behalf
of Bancshares or UCB at any time to Triad in connection with this
Agreement (including without limitation information "Previously
Disclosed" by Bancshares and UCB), when considered as
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a whole, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. Each document delivered or
to be delivered by Bancshares or UCB to Triad is or will be a true and
complete copy of such document, unmodified except by another document
delivered by Bancshares or UCB.
ARTICLE IV. COVENANTS OF TRIAD
4.01. AFFIRMATIVE COVENANTS OF TRIAD. Triad hereby
covenants and agrees as follows with Bancshares and UCB.
a. "AFFILIATES" OF TRIAD. Triad will use its best
efforts to cause each person who shall be deemed by Bancshares or its
counsel, in their sole discretion, to be an Affiliate of Triad (as
defined in Paragraph 2.28 above), to execute and deliver to
Bancshares prior to the Closing a written agreement (the "Affiliates'
Agreement") relating to restrictions on shares of Bancshares Stock to
be received by such Affiliates pursuant to this Agreement and which
Affiliates' Agreement shall be in form and content reasonably
satisfactory to Bancshares and substantially in the form attached as
Schedule B to this Agreement. Certificates for the shares of
Bancshares Stock issued to Affiliates of Triad shall bear a restrictive
legend (substantially in the form as shall be set forth in the
Affiliates' Agreement) with respect to the restrictions applicable
to such shares.
b. CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME.
While the parties recognize that the operation of Triad and the
Subsidiary until the Effective Time is the responsibility of Triad
and the Subsidiary and their respective Boards of Directors and
officers, Triad agrees that, between the date of this Agreement and
the Effective Time, Triad will carry on its business, and it will
cause the Subsidiary to carry on its business, in and only in the
regular and usual course in substantially the same manner as such
business heretofore was conducted, and, to the extent consistent with
such business and within its ability to do so, Triad agrees that it
will:
(i) preserve intact its present business
organization, keep available its present officers and employees, and
preserve its relationships with customers, depositors, creditors,
correspondents, suppliers, and others having business relationships with
it;
(ii) maintain all its properties and
equipment in customary repair, order and condition, ordinary wear and
tear excepted;
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(iii) maintain its books of account and
records in the usual, regular and ordinary manner in accordance with
sound business practices applied on a consistent basis;
(iv) comply with all laws, rules and
regulations applicable to it, its properties and to the conduct of its
business;
(v) continue to maintain in force
insurance such as is described in Paragraph 2.26. above; will not
modify any bonds or policies of insurance in effect as of the date
hereof unless the same, as modified, provides substantially equivalent
coverage; and, will not cancel, allow to be terminated or, to the extent
available, fail to renew, any such bond or policy of insurance unless
the same is replaced with a bond or policy providing substantially
equivalent coverage; and,
(vi) promptly provide to Bancshares and
UCB such information about Triad and the Subsidiary and their
financial condition, results of operations, prospects, businesses,
assets, loan portfolio, investments, properties or operations, as
they reasonably shall request.
c. PERIODIC INFORMATION REGARDING LOANS. All
new extensions of credit in excess of $800,000 will be submitted by
Triad to UCB on an after-the-fact basis for UCB's review within 10
business days of the date of the extension of credit.
Additionally, Triad agrees to make available
and provide to Bancshares and UCB the following information with
respect to Triad's loans and other extensions of credit (such assets
herein referred to as "Loans") as of September 30, 1995 and each month
thereafter until the Effective Time, such information for each
month to be in form and substance as is usual and customary in the
conduct of Triad's business and to be furnished within twenty (20) days
of the end of each month ending after the date hereof:
(i) a list of Loans past due for sixty
(60) days or more as to principal or
interest;
(ii) an analysis of the Loan Loss Reserve
and management's assessment of the
adequacy of the Loan Loss Reserve,
which analysis and assessment shall
include a list of all classified or
"watch list" Loans, along with the
outstanding balance and amount
specifically allocated to the Loan
Loss Reserve for each such
classified or "watch list" Loan;
(iii) a list of Loans in nonaccrual
status;
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(iv) a list of all Loans over $50,000
without principal reduction for a
period of longer than one year;
(v) a list of all foreclosed real
property or other real estate owned
and all repossessed personal
property;
(vi) a list of reworked or restructured
Loans over $50,000 and still
outstanding, including original
terms, restructured terms and
status; and
(vii) a list of any actual or
threatened litigation by or against
Triad pertaining to any Loans or
credits, which list shall contain
a description of circumstances
surrounding such litigation, its
present status and management's
evaluation of such litigation.
d. NOTICE OF CERTAIN CHANGES OR EVENTS.
Following the execution of this Agreement and up to the Effective
Time, Triad promptly will notify UCB in writing of and provide to it
such information as it shall request regarding (i) any material adverse
change in its financial condition, results of operations, prospects,
business, assets, loan portfolio, investments, properties or operations,
or of the actual or prospective occurrence of any condition or event
which, with the lapse of time or otherwise, may or could cause, create
or result in any such material adverse change, or of (ii) the actual or
prospective existence or occurrence of any condition or event which,
with the lapse of time or otherwise, has caused or may or could cause
any statement, representation or warranty of Triad herein, or any
information that has been Previously Disclosed by Triad to UCB, to
be or become materially inaccurate, misleading or incomplete, or
which has resulted or may or could cause, create or result in the
material breach or violation of any of Triad's covenants or agreements
contained herein or in the failure of any of the conditions described in
Paragraphs 7.01. or 7.03. below.
e. CONSENTS TO ASSIGNMENT OF LEASES. Triad will use
its best efforts to obtain all required consents of its landlords to
the assignment to UCB of Triad's rights and obligations under the Real
Property Leases, each of which consents shall be in such form as shall
be specified by UCB.
f. FURTHER ACTION; INSTRUMENTS OF TRANSFER, ETC.
Triad covenants and agrees with Bancshares and UCB that it (i) will use
its best efforts in good faith to take or cause to be taken all action
required of it hereunder as promptly as practicable so as to permit the
consummation of the transactions described herein at the earliest
possible date, (ii) shall perform all acts and execute and deliver to
Bancshares and UCB all documents or instruments required herein or as
otherwise shall be reasonably necessary or useful to
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or requested by either of them in consummating such transactions, and,
(iii) will cooperate with Bancshares and UCB in every way in carrying
out, and will pursue diligently the expeditious completion of, such
transactions.
4.02. NEGATIVE COVENANTS OF TRIAD. Triad hereby
covenants and agrees that, between the date hereof and the Effective
Time, Triad will not do any of the following things or take any of the
following actions without the prior written consent and authorization of
the President of Bancshares.
a. AMENDMENTS TO ARTICLES OF INCORPORATION OR
BYLAWS. Neither Triad nor the Subsidiary will amend its Articles of
Incorporation or Bylaws.
b. CHANGE IN CAPITAL STOCK. Except for Triad
Stock to be issued under Triad's Stock Options Policy for Non-Employee
Directors and Triad's Employees' Stock Option Plan and Triad's Directors
Deferred Compensation Plan, neither Triad nor the Subsidiary will
(i) make any change in its authorized capital stock, or create any
other or additional authorized capital stock or other securities, or
(ii) issue, sell, purchase, redeem, retire, reclassify, combine or
split any shares of its capital stock or other securities, other than
the issuance of shares upon the exercise of stock options which are
outstanding as of the date of this Agreement (including securities
convertible into capital stock), or enter into any agreement or
understanding with respect to any such action. The members of Triad's
Board of Directors shall be allowed to elect deferral of their
directors' fees pursuant to Triad's Directors Deferred
Compensation Plan until December 31, 1995. Any fees earned thereafter
until the Effective Time shall be paid in cash.
c. OPTIONS, WARRANTS AND RIGHTS. Except for
options to be granted pursuant to the terms of the Non-Employee Director
Stock Option Plan dated February 16, 1993, neither Triad nor the
Subsidiary will grant or issue any options, warrants, calls, puts or
other rights of any kind relating to the purchase, redemption or
conversion of shares of its capital stock or any other securities
(including securities convertible into capital stock) or enter into
any agreement or understanding with respect to any such action.
d. DIVIDENDS. Except as provided in Paragraph
8.02.c. hereof, Triad will not declare or pay any dividends or make any
other distributions on or in respect of any shares of its capital
stock or otherwise to its shareholders.
e. EMPLOYMENT, BENEFIT OR RETIREMENT AGREEMENTS
OR PLANS. Except as required by law, neither Triad nor the Subsidiary
will (i) enter into or become bound by any contract, agreement or
commitment for the employment or compensation of any officer, employee
or consultant which is not immediately terminable by Triad or the
Subsidiary without cost or other liability on no more than thirty (30)
days notice; (ii) adopt, enter into or become bound by
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any new or additional profit-sharing, bonus, incentive, change in
control or "golden parachute", stock option, stock purchase,
pension, retirement, insurance (hospitalization, life or other) or
similar contract, agreement, commitment, understanding, plan or
arrangement (whether formal or informal) with respect to or which
provides for benefits for any of its current or former directors,
officers, employees or consultants; or (iii) enter into or become
bound by any contract with or commitment to any labor or trade union or
association or any collective bargaining group.
f. INCREASE IN COMPENSATION; ADDITIONAL COMPENSATION.
Except as otherwise provided herein, neither Triad nor the Subsidiary
will increase the compensation or benefits of, or pay any bonus or
other special or additional compensation to, any of its directors,
officers, employees or consultants. Notwithstanding anything
contained herein to the contrary, this Paragraph 4.02.f. shall not
prohibit annual merit increases in the salaries of its employees
or other payments made to employees or directors in connection with
existing compensation or benefit plans including the Short-Term
Management Incentive Plan, the Long-Term Management Incentive Plan,
the Sales Incentive Plan and the Bonus Plan so long as such increases
or payments are effected at such times and in such manner and amounts
as shall be consistent with Triad's past compensation policies and
practices and, in the case of payments made pursuant to compensation
or benefit plans, consistent with the terms of those plans and provided
that if the Merger occurs prior to such compensation or benefit
plans' normal anniversary date, payments made pursuant to those
compensation or benefit plans shall be made on a pro rata basis
for the appropriate portion of the fiscal year prior to the Merger.
g. ACCOUNTING PRACTICES. Neither Triad nor the
Subsidiary will make any changes in its accounting methods, practices or
procedures or in depreciation or amortization policies, schedules or
rates heretofore applied (except as required by generally accepted
accounting principles or governmental regulations).
h. ACQUISITIONS; ADDITIONAL BRANCH OFFICES.
Neither Triad nor the Subsidiary will directly or indirectly (i) acquire
or merge with, or acquire any branch or all or any significant part of
the assets of, any other person or entity, (ii) open any new branch
office, or (iii) enter into or become bound by any contract, agreement,
commitment or letter of intent relating to, or otherwise take or agree
to take any action in furtherance of, any such transaction or the
opening of a new branch office; provided that Triad shall be allowed to
open a branch at 127 North Greene Street, Greensboro, North Carolina and
open a branch at another location to replace its existing Irving Park
branch.
i. CHANGES IN BUSINESS PRACTICES. Except as may
be required by the FDIC, the Commissioner or any other governmental or
other regulatory agency or as shall be required by applicable law,
regulation or this Agreement, neither Triad nor the Subsidiary will
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(i) change in any material respect the nature of its business or the
manner in which it conducts its business, (ii) discontinue any material
portion or line of its business, or (iii) change in any material respect
its lending, investment, asset-liability management or other material
banking or business policies (except to the extent required by Paragraph
4.01.b. above).
j. EXCLUSIVE MERGER AGREEMENT. Neither Triad
nor the Subsidiary will, directly or indirectly, through any
person (i) encourage, solicit or attempt to initiate or procure
discussions, negotiations or offers with or from any person or entity
(other than Bancshares or UCB) relating to a merger or other
acquisition of Triad or the Subsidiary, or the purchase or
acquisition of any Triad Stock or Subsidiary Stock, any branch office
of Triad or all or any significant part of Triad's or the Subsidiary's
assets; or provide assistance to any person in connection with any such
offer; (ii) disclose to any person or entity any information not
customarily disclosed to the public concerning Triad or the
Subsidiary or their businesses, or afford to any other person or
entity access to its properties, facilities, books or records; (iii)
sell or transfer any branch office of Triad or all or any significant
part of its or the Subsidiary's assets to any other person or entity, or
(iv) enter into or become bound by any contract, agreement,
commitment or letter of intent relating to, or otherwise take or agree
to take any action in furtherance of, any such transaction.
k. ACQUISITION OR DISPOSITION OF ASSETS.
Neither Triad nor the Subsidiary will, without the prior written consent
of UCB, which consent shall not be unreasonably withheld:
(i) sell or lease (as lessor), or enter
into or become bound by any contract, agreement, option or commitment
relating to the sale, lease (as lessor) or other disposition of any
real estate; or sell or lease (as lessor), or enter into or become
bound by any contract, agreement, option or commitment relating to
the sale, lease (as lessor) or other disposition of any equipment
or any other fixed or capital asset (other than real estate) having a
value on Triad's or the Subsidiary's books or a fair market value,
whichever is greater, of more than $25,000 for any individual item or
asset, or more than $50,000 in the aggregate for all such items or
assets;
(ii) except for renegotiation of
existing leases, the reduction of the size of the Northpoint branch and
the possible transfer of operations from the Irving Park branch to
another location, purchase or lease (as lessee), or enter into or
become bound by any contract, agreement, option or commitment relating
to the purchase, lease (as lessee) or other acquisition of any real
property; or purchase or lease (as lessee), or enter into or become
bound by any contract, agreement, option or commitment relating to the
purchase, lease (as lessee) or other acquisition of any equipment or
any other fixed assets (other than real estate) having a purchase
price, or involving aggregate lease payments, in excess
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of $25,000 for any individual item or asset, or more than $50,000 in the
aggregate for all such items or assets;
(iii) enter into any purchase commitment
for supplies or services which calls for prices of goods or fees
for services materially higher than current market prices or fees or
which obligates Triad or the Subsidiary for a period longer than 12
months;
(iv) sell, purchase or repurchase, or
enter into or become bound by any contract, agreement, option or
commitment to sell, purchase or repurchase, any loan or other
receivable or any participation in any loan or other receivable (with
the exception of investment securities and residential mortgage loans
sold in the ordinary course of Triad's business); or
(v) sell or dispose of, or enter into
or become bound by any contract, agreement, option or commitment
relating to the sale or other disposition of, any other asset of
Triad or the Subsidiary (whether tangible or intangible, and
including without limitation any trade name, copyright, service
mark or intellectual property right or license); or assign its right
to or otherwise give any other person its permission or consent to use
or do business under Triad's or the Subsidiary's corporate name or
any name similar thereto; or release, transfer or waive any license or
right granted to it by any other person to use any trademark,
trade name, copyright or intellectual property right.
l. DEBT; LIABILITIES. Except in the ordinary
course of its business consistent with its past practices (including
routine borrowings for liquidity purposes from the Federal Home Loan
Bank of Atlanta and other correspondent banks), neither Triad nor
the Subsidiary will (i) enter into or become bound by any promissory
note, loan agreement or other agreement or arrangement pertaining
to its borrowing of money, (ii) assume, guarantee, endorse or
otherwise become responsible or liable for any obligation of any
other person or entity, or (iii) incur any other liability or
obligation (absolute or contingent).
m. LIENS; ENCUMBRANCES. Neither Triad nor the
Subsidiary will mortgage, pledge or subject any of its assets to, or
permit any of its assets to become or (except as Previously Disclosed)
remain subject to, any lien or any other encumbrance (other than in the
ordinary course of business consistent with its past practices in
connection with securing of public funds deposits, securities
repurchase agreements or other similar operating matters).
n. WAIVER OF RIGHTS. Neither Triad nor the
Subsidiary will waive, release or compromise any material rights in
its favor (except in the ordinary course of business) except in good
faith for fair value in money or money's worth, nor waive, release or
compromise any rights against or with respect to any of its
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officers, directors or shareholders or members of families of officers,
directors or shareholders.
o. OTHER CONTRACTS. Neither Triad nor the
Subsidiary will enter into or become bound by any contracts,
agreements, commitments or understandings (other than those described
elsewhere in this Paragraph 4.02.) (i) for or with respect to any
charitable contributions; (ii) with any governmental or regulatory
agency or authority; (iii) pursuant to which Triad or the Subsidiary
would assume, guarantee, endorse or otherwise become liable for the
debt, liability or obligation of any other person; (iv) which is
entered into other than in the ordinary course of its business; and
(v) which, in the case of any one contract, agreement, commitment or
understanding and whether or not in the ordinary course of its
business, would obligate or commit Triad or the Subsidiary to make
expenditures of more than $25,000 (other than contracts, agreements,
commitments or understandings entered into in the ordinary course of
Triad's lending operations).
ARTICLE V. COVENANTS OF UCB AND BANCSHARES
UCB and Bancshares each hereby covenants and agrees as
follows with Triad.
5.01. BOARD OF DIRECTORS.
a. APPOINTMENT OF DIRECTOR. Following the
Effective Time, Bancshares' Board of Directors will appoint one
member of Triad's Board of Directors (who will be selected by mutual
agreement of Bancshares and Triad) to serve as a director of UCB until
the next meeting of shareholders at which members of UCB's Board of
Directors are elected. Thereafter, such person shall be nominated and
recommended as a director of UCB for a one-year term at such meeting of
UCB's shareholders. Such person's continued service as a director of
UCB shall be subject to customary regulatory approvals, his or her
qualification to serve as a director under applicable banking
regulations and to Bancshares' and UCB's bylaws. For his services as a
director of UCB, the person as appointed as described above, provided
he remains a director of UCB, shall be compensated until the end of such
person's full one-year term as a director of UCB in accordance with
UCB's then current fee schedule.
b. LOCAL ADVISORY BOARD. Each of the members of
Triad's Board of Directors and Triad's advisory boards at the
Effective Time (other than directors who also are employees of Triad or
who do not desire to serve as such) shall be appointed to serve at
UCB's pleasure as members of a local advisory board for one of UCB's
branch offices in Triad's former geographic market. Each former Triad
director who serves as an advisory board member for UCB for a period
of one year following the Effective Time (and who during that
period discharges his duties in that capacity and promotes in good
faith UCB's best interests) will be paid a
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retainer of $1,500 and fees equal to $300 per meeting attended and each
former Triad advisory board member who serves as an advisory board
member for UCB for a period of one year following the Effective Time
(and who during that period discharges his duties in that capacity
and promotes in good faith UCB's best interest) will be paid a
retainer of $200 and fees equal to $50 per meeting attended provided
that such compensation shall be paid at the end of such one-year period
and that such compensation will be paid only if such individual remains
a member of UCB's advisory board for the one-year period. Following
the one-year transition period, each such director who continues to
serve as an advisory director will receive fees for such service in
accordance with UCB's then current schedule of advisory board fees.
Each such director's service as an advisory director will be at UCB's
pleasure and will be subject to UCB's normal policies and procedures
regarding the appointment and service of advisory directors, including
retirement policies. However, for a period of one year following the
Effective Time, UCB's normal policy of retirement at age 70 will be
waived.
5.02. NASDAQ NOTIFICATION OF LISTING OF ADDITIONAL
SHARES OF BANCSHARES STOCK. On or before the fifteenth day prior to
the Effective Time, Bancshares shall file with Nasdaq such
notifications and other materials (and shall pay such fees) as shall be
required for the listing on the Nasdaq National Market of the shares of
Bancshares Stock to be issued to Triad's shareholders at the Effective
Time.
5.03. INTERIM FINANCIAL RESULTS. After the close of
the first calendar quarter for which it is possible, Bancshares
shall publish and distribute publicly interim consolidated
financial statements of Bancshares reflecting at least thirty (30)
days of the combined results of operations of Bancshares, UCB and
Triad by filing a Form 8-K to which is attached the statement of
earnings for such calendar quarter in such form as Bancshares
normally releases to the public and such Form 8-K shall be filed at
the same time as such statement of earnings is released to the public.
ARTICLE VI. MUTUAL AGREEMENTS
6.01. SHAREHOLDERS' MEETING; REGISTRATION
STATEMENT; PROXY STATEMENT/PROSPECTUS.
a. MEETING OF SHAREHOLDERS. Triad shall cause a
meeting of its shareholders (the "Shareholder Meeting", which may be a
regular annual meeting or a specially called meeting) to be held as soon
as reasonably possible (but in no event less than 20 days following the
mailing to Triad's shareholders of the "Proxy Statement/Prospectus"
described below or, without Bancshares' approval, later than April 30,
1996) for the purpose of Triad's shareholders voting on the approval of
the Agreement and the Merger. In connection with the call and
conduct of and all other matters relating to the Shareholder Meeting
(including the
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solicitation of proxies), Triad shall fully comply with all provisions
of applicable law and regulations and with Triad's Articles of
Incorporation and By-laws.
b. PREPARATION AND DISTRIBUTION OF PROXY
STATEMENT/PROSPECTUS. Bancshares and Triad jointly will prepare a
"Proxy Statement/Prospectus" for distribution to Triad's shareholders
as Triad's proxy statement relating to Triad's solicitation of
proxies for use at the Shareholder Meeting and as Bancshares'
prospectus relating to the offer and distribution of Bancshares
Stock as described herein. The Proxy Statement/ Prospectus shall be in
such form and shall contain or be accompanied by such information
regarding the Shareholder Meeting, this Agreement, the parties
hereto, the Merger and other transactions described herein as is
required by applicable law and regulations and otherwise as shall be
agreed upon by Bancshares and Triad. Bancshares shall include the Proxy
Statement/Prospectus as the prospectus in its "Registration Statement"
described below; and, each party hereto will cooperate with the other in
good faith and will use their best efforts to cause the
Proxy Statement/Prospectus to comply with any comments of the SEC
thereon.
Bancshares and Triad will mail the Proxy
Statement/Prospectus to Triad's shareholders not less than 20 days prior
to the scheduled date of the Shareholder Meeting; provided, however,
that no such materials shall be mailed to Triad's shareholders unless
and until Bancshares shall have determined to its own satisfaction that
the conditions specified in Paragraph 7.03.d. below have been
satisfied and shall have approved such mailing.
c. REGISTRATION STATEMENT AND "BLUE SKY" APPROVALS.
As soon as practicable following the execution of this Agreement,
Bancshares will prepare and file with the SEC a registration statement
on Form S-4 (or on such other form as Bancshares shall determine to be
appropriate) (the "Registration Statement") covering the Bancshares
Stock to be issued to shareholders of Triad pursuant to this Agreement.
Additionally, Bancshares shall take all such other actions, if any, as
shall be required by applicable state securities or "blue sky" laws
(i) to cause the Bancshares Stock to be issued upon consummation of
the Merger, at the time of the issuance thereof, to be duly qualified
or registered (unless exempt) under such laws, (ii) to cause all
conditions to any exemptions from qualification or registration under
such laws to have been satisfied, and (iii) to obtain any and all
required approvals or consents to the issuance of such stock.
d. RECOMMENDATION OF TRIAD'S BOARD OF DIRECTORS.
Unless, due to a material change in circumstances or for any other
reason Triad's Board of Directors reasonably believes that such a
recommendation would violate the directors' duties or obligations
as such to Triad or to its shareholders, Triad's Board of Directors
will recommend to and actively encourage Triad's shareholders that
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they vote their shares of Triad Stock at the Shareholder Meeting to
ratify and approve this Agreement and the Merger, and the Proxy
Statement/Prospectus mailed to Triad's shareholders will so indicate
and state that Triad's Board of Directors considers the Merger to be
advisable and in the best interests of Triad and its shareholders.
e. INFORMATION FOR PROXY STATEMENT/PROSPECTUS AND
REGISTRATION STATEMENT. Bancshares, UCB and Triad each agrees to respond
promptly, and to use its best efforts to cause its directors, officers,
accountants and affiliates to respond promptly, to requests by any
other such party and its counsel for information for inclusion in the
various applications for regulatory approvals and in the Proxy
Statement/Prospectus. Bancshares, UCB and Triad each hereby covenants
with the others that none of the information provided by it for
inclusion in the Proxy Statement/Prospectus will, at the time of its
mailing to Triad's shareholders, contain any untrue statement of a
material fact or omit any material fact required to be stated therein
or necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not false or
misleading; and, at all times following such mailing up to and
including the Effective Time, none of such information contained in
the Proxy Statement/Prospectus, as it may be amended or supplemented,
will contain an untrue statement of a material fact or omit any
material fact required to be stated therein or necessary in order to
make the statements contained therein, in light of the circumstances
under which they were made, not false or misleading.
6.02. REGULATORY APPROVALS.
Promptly following the date of this Agreement, UCB, Bancshares and Triad
each shall use their respective best efforts in good faith to (i)
prepare and file, or cause to be prepared and filed, all applications
for regulatory approvals and actions as may be required of them,
respectively, by applicable law and regulations with respect to the
transactions described herein (including applications to the FDIC,
the Commissioner and the North Carolina State Banking Commission, and
to any other applicable federal or state banking, securities or other
regulatory authority), and (ii) obtain all necessary regulatory
approvals required for consummation of the transactions described
herein. Each such party shall cooperate with each other party in the
preparation of all applications to regulatory authorities and, upon
request, promptly shall furnish all documents, information, financial
statements or other material that may be required by any other
party to complete any such application; and, before the filing
therefore, each party to this Agreement shall have the right to review
and comment on the form and content of any such application to be
filed by any other party. Should the appearance of any of the officers,
directors, employees or counsel of any of the parties hereto be
requested by any other party or by any governmental agency at any
hearing in connection with any such application, such party shall
promptly use its best efforts to arrange for such appearance.
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6.03. ACCESS. Following the date of this Agreement and to and
including the Effective Time, Triad shall provide Bancshares and UCB
and their employees, accountants and counsel, access to all its
books, records, files and other information (whether maintained
electronically or otherwise), to all its properties and facilities,
and to all its employees, accountants, counsel and consultants, for
purposes of the conduct of such reasonable investigation and review as
they shall, in their sole discretion, consider to be necessary or
appropriate; provided, however, that any such review conducted by
Bancshares and UCB shall be performed in such a manner as will not
interfere unreasonably with Triad's normal operations, or with
Triad's relationship with its customers or employees, and shall be
conducted in accordance with procedures established by the parties
having due regard for the foregoing.
6.04. COSTS. Subject to the provisions of
Paragraph 8.03. below, and whether or not this Agreement shall be
terminated or the Merger shall be consummated, Triad, Bancshares and UCB
each shall pay its own legal, accounting and financial advisory fees and
all its other costs and expenses incurred or to be incurred in
connection with the execution and performance of its obligations under
this Agreement or otherwise in connection with this Agreement and the
transactions described herein (including without limitation all
accounting fees, legal fees, filing fees, printing costs, travel
expenses, and, in the case of Triad, all fees owed to The Carson Medlin
Company ("Carson Medlin") and the cost of Triad's "Fairness Opinion"
described in Paragraph 7.01.d. below, and, in the case of Bancshares and
UCB, the cost of the "Environmental Survey" described in Paragraph 6.06.
below). However, subject to the provisions of Paragraph 8.03. below,
all costs incurred in connection with the printing and mailing of the
Proxy Statement/Prospectus shall be deemed to be incurred and shall
be paid fifty percent (50%) by Triad and fifty percent (50%) by
Bancshares; provided, however, that if the Merger is not consummated on
or before July 31, 1996 by reason of the failure of Bancshares or UCB
to receive any regulatory approval as described in Paragraph 7.01.a.
hereof and such event is a consequence of the failure of Bancshares or
any Bancshares subsidiary to satisfy its obligations under the
Community Reinvestment Act, the Home Mortgage Disclosure Act, the
Equal Credit Opportunity Act, the Fair Housing Act and/or the
regulations promulgated thereunder, Bancshares and UCB shall
reimburse Triad for one-half of Triad's costs and expenses up to a
total reimbursement amount of $87,500; provided further, however,
that if Triad is acquired by any entity or individual other than
Bancshares or UCB within twelve (12) months after the termination of
this Agreement by Triad pursuant to Paragraph 8.02.b.iv hereof, all
such reimbursed costs and expenses shall be repaid by Triad to
Bancshares.
6.05. ANNOUNCEMENTS. Triad, Bancshares and UCB each agrees
that no person other than the parties to this Agreement is authorized to
make any public announcements or statements about this Agreement or
any of the transactions described herein, and that, without the prior
review and consent of the others (which
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consent shall not unreasonably be denied or delayed), no party hereto
may make any public announcement, statement or disclosure as to
the terms and conditions of this Agreement or the transactions
described herein, except for such disclosures as may be required
incidental to obtaining the prior approval of any regulatory agency or
official to the consummation of the transactions described herein.
However, notwithstanding anything contained herein to the contrary,
prior review and consent shall not be required if in the good faith
opinion of counsel to Bancshares any such disclosure by Bancshares
or UCB is required by law or otherwise is prudent.
6.06. ENVIRONMENTAL STUDIES.
At its option UCB may cause to be conducted Phase I environmental
assessments of the Real Property, the real estate subject to any
Real Property Lease, or the Loan Collateral, or any portion thereof,
together with such other studies, testing and intrusive sampling and
analyses as Bancshares or UCB shall deem necessary or desirable
(collectively, the "Environmental Survey"). UCB shall complete all
such Phase I environmental assessments within forty-five (45) days
following the date of this Agreement and thereafter to conduct and
complete any such additional studies, testing, sampling and
analyses within one hundred twenty (120) days following completion
of all Phase I environmental assessments. Subject to the provisions
of Paragraph 8.03. below, the costs of the Environmental Survey
shall be paid by Bancshares and UCB. If (i) the final results of any
Environmental Survey (or any related analytical data) reflect that
there likely has been any discharge, disposal, release or emission by
any person of any Hazardous Substance on, from or relating to any
of the Real Property, real estate subject to a Real Property Lease or
Loan Collateral at any time prior to the Effective Time, or that any
action has been taken or not taken, or a condition or event likely
has occurred or exists, with respect to any of the Real Property,
real estate subject to a Real Property Lease or Loan
Collateral which constitutes or would or may constitute a violation of
any Environmental Laws, and if, (ii) based on the advice of their
legal counsel or other consultants, Bancshares or UCB believes that
Triad, the Subsidiary or either of them could become responsible for
the remediation of such discharge, disposal, release or emission or
for other corrective action with respect to any such violation, or
that Triad, the Subsidiary or either of them could become liable for
monetary damages (including without limitation any civil or
criminal penalties or assessments) resulting therefrom (or that,
in the case of any of the Loan Collateral, Triad could incur any such
liability if it acquired title to such Loan Collateral), and if,
(iii) based on the advice of their legal counsel or other consultants,
Bancshares or UCB believes the amount of expenses or liability
which Triad, the Subsidiary or either of them could incur or for which
Triad, the Subsidiary or either of them could become responsible or
liable on account of any and all such remediation, corrective action
or monetary damages at any time or over any period of time could equal
or exceed an aggregate of $350,000, then Bancshares or UCB shall give
Triad prompt written notice thereof (together with all information in
its possession relating thereto) and, at Bancshares' or UCB's sole
option and
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discretion, at any time thereafter and up to the Effective Time,
Bancshares or UCB may terminate this Agreement without further
obligation or liability to Triad or its shareholders.
6.07. EMPLOYEES; SEVERANCE PAYMENTS; EMPLOYEE BENEFITS.
a. EMPLOYMENT AGREEMENTS. Provided he remains
employed by Triad at the Effective Time in his current position, then
UCB shall enter into an employment agreement with James E. Mims as of
the Effective Time which shall contain substantially the same terms and
conditions and be in substantially the same forms as are attached as
Schedule C to this Agreement.
Bancshares and UCB acknowledge the existence of an
Employment Agreement dated December 14, 1993 between Bankers Trust
of North Carolina (predecessor in interest to Triad) and Carl I.
Carlson, III and an Employment Agreement dated December 15, 1993
between Bankers Trust of North Carolina (predecessor in interest to
Triad) and Ted Y. Matney, and Bancshares and UCB further acknowledge
that Bancshares and UCB will be bound by the terms of such employment
agreements upon the Effective Time. Notwithstanding the existence of
Mr. Carlson's employment agreement, at the Effective Time, UCB shall
enter into an employment agreement with Mr. Carlson, provided he
remains employed by Triad at the Effective Time, which shall contain
substantially the same terms and conditions and be in substantially the
same form as is attached as Schedule D to this Agreement.
b. EMPLOYMENT OF OTHER TRIAD EMPLOYEES.
Provided they remain employed by Triad at the Effective Time, UCB will
attempt in good faith, but shall have no obligation, to locate suitable
positions for and to offer employment (at an office of UCB located
within a reasonable commuting distance from their respective job
locations at the Effective Time) to, all other employees of
Triad. Any employment so offered by UCB to an employee of Triad
shall be in such a position, at such location within UCB's state-wide
branch system, and for such rate of compensation as UCB shall determine
in its sole discretion. Each such person's employment with UCB shall
be on an "at-will" basis, and nothing in this Agreement shall be deemed
to constitute an employment agreement with any such person or to
obligate UCB to employ any such person for any specific period of time
or in any specific position or to restrict UCB's right to terminate
the employment of any such person at any time and for any reason
satisfactory to it.
c. SEVERANCE COMPENSATION.
Triad will be permitted to pay severance compensation to any employee of
Triad at the Effective Time who is not offered employment by UCB,
which offer must be at a comparable salary, in the same market area
as that in which the employee is serving at the Effective Time and in
the employee's same area of expertise or, if outside the employee's
area of expertise, with the promise of sufficient job training in the
new area of expertise requested by UCB (other than any employee who is
party to an employment agreement with Triad). The amount of
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such compensation paid to any employee shall not exceed the total
of (i) two (2) months' salary or normal wages (at the person's then
current salary or wage rate as an employee of Triad) plus (ii) one
(1) week's salary or wages (at the person's then current salary or
wage rate as an employee of Triad) multiplied by a number (which in no
event shall be less than three (3) or more than fourteen (14)) equal to
the person's number of complete years of service (from date of hire)
as an employee of Triad. In the case of any employee of Triad at
the Effective Time who is offered employment by and becomes an
employee of UCB (a "New Employee"), UCB agrees that, if such New
Employee's employment is terminated by UCB within ninety (90) days
following the Effective Time without cause, then UCB will pay to such
terminated New Employee severance compensation in an amount equal to
the amount of severance compensation such person would have received
from Triad as provided above if he or she had not accepted
employment with UCB; and provided further that if such New Employees'
employment is terminated by UCB after ninety (90) days following the
Effective Time without cause, then UCB will pay to such terminated New
Employees severance compensation in an equal to the amount of severance
compensation such person would have received from Triad as provided
above if he or she had not accepted employment with UCB, less any
salary or wages paid to such employee by UCB between the Effective
Time and the date of such employee's termination. The determination of
whether there exists cause for UCB's termination of any New
Employee's employment shall be made by and solely within the discretion
of UCB's Director of Human Resources.
In the cases of Richard M. Cobb and James C.
Edwards, in the event either of them is employed by Triad at the
Effective Time and either of them is not offered employment by UCB
or refuses to accept an offer of employment from UCB, then Triad
will be permitted to pay severance compensation to such employee in
an amount equal to the total of twelve (12) month's salary (at the
person's then current salary rate as an employee of Triad). In the
event either Mr. Cobb or Mr. Edwards becomes a New Employee, UCB agrees
that, if such New Employee voluntarily elects to terminate employment
with UCB at any time within twelve (12) months following the Effective
Time, then UCB will pay to such terminated New Employee severance
compensation in an amount equal to the amount of severance compensation
such person would have received from Triad as provided above as if he
had not accepted employment with UCB, less any salary or wages paid to
such employee by UCB between the Effective Time and the date of such
employee's termination; and provided further that in the event Mr. Cobb
or Mr. Edwards becomes a New Employee, UCB agrees that, if such New
Employee's employment is terminated by UCB within twelve (12)
months following the Effective Time without cause (determined in the
manner described above), then UCB will pay to such terminated New
Employee severance compensation in an amount equal to the amount of
severance compensation such person would have received from Triad as
provided above.
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In addition, in the case of certain employees of
Triad who will not be offered employment with UCB following the
Effective Time or who will be offered employment with UCB but at
salary or wage rates that are lower than their rates as employees at
Triad, UCB may specifically request in writing that such employees
remain employed by Triad until the Effective Time and, in the case of
each such employee who does remain so employed until the Effective Time,
then (whether or not such person becomes a New Employee) UCB will pay
to such employee as a bonus an amount equal to 10% of the employee's
then current annual salary or wage rate as an employee of Triad. No
such bonus shall be payable to any employee unless UCB shall have
specifically requested in writing that such employee remain until the
Effective Time (and which written request shall specifically refer
to such bonus). Employees of Triad who receive such a written request
but who terminate their employment prior to the Effective Time shall not
be entitled to receive such bonus payment.
UCB shall determine which of Triad's
employees will and will not be offered employment with UCB following
the Effective Time and, within ninety (90) days following the date of
this Agreement, to notify each of Triad's employees of its
determination with respect to that employee and to issue the written
requests described above to certain of Triad's employees.
Notwithstanding anything contained herein to the contrary, no
payment of severance compensation shall be made to any person who
does not remain an employee of Triad at the Effective Time.
d. EMPLOYEE BENEFITS. Except as
otherwise provided herein, any New Employee shall become entitled to
receive all employee benefits and to participate in all benefit plans
provided by UCB on the same basis (including costs) and subject to the
same eligibility and vesting requirements, and to the same conditions,
restrictions and limitations, as generally are in effect and applicable
to other newly hired employees of UCB. However, each New Employee shall
be given credit for his or her past service with Triad for purposes of
(i) entitlement to vacation and sick leave and all other employee
benefits, and (ii) eligibility for participation and vesting in
Bancshares' Section 401(k) savings plan and in its defined benefit
pension plan (the "UCB Pension Plan"). At the Effective Time, or as soon
as administratively possible thereafter, the Savings Plan will be
merged with Bancshares' and UCB's 401(k) Plan and the Pension Plan will
be merged with the UCB Pension Plan, and each New Employee shall be
given credit for past service with Triad (but not for past service with
Triad's predecessor banks, Bankers Trust of North Carolina and Piedmont
State Bank) for purposes of the calculation or determination of
benefits under the UCB Pension Plan. Bancshares further agrees to
assume or to cause UCB and/or its employees to assume as of the
Effective Time any and all administrative and fiduciary duties with
respect to the day-to-day operation of such plans, including the duties
of trustee.
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At the Effective Time all New Employees will have
the option of participating in UCB's health program (regardless of
pre-existing conditions) and the cost of such health insurance shall
be equal to the cost for any UCB employee. All New Employees on the
date hereof who are participating in Triad's dental program will have
the option of participating in UCB's dental program with any
pre-existing dental conditions not covered by UCB's dental insurance
paid for by UCB up to the limits of UCB's dental insurance.
The number of days of vacation and sick leave,
respectively, which shall be available to any New Employee during 1996
as an employee of UCB shall be reduced by the number of days of
vacation or sick leave used by such New Employee during 1996 prior to
the Effective Time as an employee of Triad, and, except as provided
below, the New Employee shall not be entitled to any credit with UCB
for unused vacation leave, sick leave or other paid leave from Triad
for 1995 or years prior thereto; provided, however, that no New
Employee shall receive in any year less vacation than he or she was
receiving from Triad at the Effective Time.
e. OTHER AGREEMENTS. At the Effective Time, UCB
will assume Triad's obligations under those existing life insurance
policies for James E. Mims maintained by Triad. In addition, UCB hereby
agrees that, immediately prior to the Effective Time, Triad shall
transfer title to the automobiles owned by Triad on the date of this
Agreement and being used respectively by James E. Mims and Carl I.
Carlson, III to such individuals.
6.08. CONFIDENTIALITY.
Bancshares, UCB and Triad each agrees that it will treat as confidential
and not disclose to any unauthorized person any documents or other
information obtained from or learned about the others during the course
of the negotiation of this Agreement and the carrying out of the events
and transactions described herein (including any information
obtained during the course of any due diligence investigation or
review provided for herein or otherwise) and which documents or other
information relates in any way to the business, operations,
personnel, customers or financial condition of such other parties;
and, that it will not use any such documents or other information for
any purpose except for the purposes for which such documents and
information were provided to it and in furtherance of the transactions
described herein. However, the above obligations of confidentiality
shall not prohibit the disclosure of any such document or information
by any party to this Agreement to the extent (i) such document or
information is then available generally to the public is already
known to the person or entity to whom disclosure is proposed to be
made (other than through the previous actions of such party in
violation of this Paragraph 6.08), (ii) such document or information
was available to the disclosing party on a nonconfidential basis
prior to the same being obtained pursuant to this Agreement,
(iii) disclosure is required by subpoena or order of a court or
regulatory authority of competent
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jurisdiction, or by the SEC or regulatory authorities in connection
with the transactions described herein, or (iv) to the extent that, in
the reasonable opinion of legal counsel to such party,
disclosure otherwise is required by law.
In the event this Agreement is terminated for any
reason, then each of the parties hereto immediately shall return to
the other parties all copies of any and all documents or other written
materials or information of or relating to such other parties which
were obtained from them during the course of the negotiation of this
Agreement and the carrying out of the events and transactions
described herein (whether during the course of any due diligence
investigation or review provided for herein or otherwise) and which
documents or other information relates in any way to the business,
operations, personnel, customers or financial condition of such other
parties.
The parties' obligations of confidentiality
under this Paragraph 6.08 shall survive and remain in effect following
any termination of this Agreement
6.09. TAX-FREE REORGANIZATION. Bancshares, UCB and Triad each
undertakes and agrees to use its best efforts to cause the Merger to
qualify as a tax-free "reorganization" within the meaning of Section
368(a)(1)(A) of the Code, and that it will not intentionally take
any action that would cause the Merger to fail to so qualify.
6.10. ACCOUNTING TREATMENT. Bancshares, UCB and Triad each
undertakes and agrees to use its best efforts to cause the Merger to
qualify to be treated as a pooling-of-interests for accounting purposes
and that it will not intentionally take any action that would cause the
Merger to fail to so qualify.
6.11. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE.
Bancshares, UCB and Triad agree that, to the extent the same can be
purchased at a reasonable cost, then immediately prior to the Closing
Date Triad shall purchase "tail" coverage under and in the same amount
of coverage as is provided by its then current directors' and officers'
liability insurance policy, effective as of the Effective Time.
6.12. OTHER PERMISSIBLE TRANSACTIONS. Bancshares, UCB and Triad
agree that Bancshares and UCB may offer to acquire, enter into
agreements to acquire and acquire financial institution holding
companies and their subsidiaries, financial institutions and their
subsidiaries, and/or the assets and liabilities of such entities (each a
"Proposed Acquisition") prior to the Effective Time; provided,
however, that in the event a Proposed Acquisition shall cause a
condition set forth in Article VII hereof to fail to be satisfied on
or before July 31, 1996, any such failure shall be deemed a termination
of this Agreement by Bancshares and UCB as described and with the
effects set forth in Section 8.04 hereof.
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ARTICLE VII. CONDITIONS PRECEDENT TO MERGER
7.01. CONDITIONS TO ALL PARTIES' OBLIGATIONS. Notwithstanding
any other provision of this Agreement to the contrary, the
obligations of each of the parties to this Agreement to consummate the
transactions described herein shall be conditioned upon the
satisfaction of each of the following conditions precedent on or
prior to the Closing Date.
a. APPROVAL BY GOVERNMENTAL OR REGULATORY
AUTHORITIES; NO DISADVANTAGEOUS CONDITIONS. (i) The Merger and other
transactions described herein shall have been approved, to the extent
required by law, by the FDIC, the Commissioner and the North Carolina
State Banking Commission, and by all other governmental or regulatory
agencies or authorities having jurisdiction over such transactions, (ii)
no governmental or regulatory agency or authority shall have withdrawn
its approval of such transactions or imposed any condition on such
transactions or conditioned its approval thereof, which condition is
reasonably deemed by Bancshares or UCB to be materially disadvantageous
or burdensome or to impact so adversely the economic or business
benefits of this Agreement to Bancshares and UCB as to render it
inadvisable for them to consummate the Merger; (iii) all waiting
periods required following necessary approvals by governmental or
regulatory agencies or authorities shall have expired, and, in the
case of the waiting period following approval by the FDIC, no
unwithdrawn objection to the Merger shall have been raised by the
U.S. Department of Justice; and (iv) all other consents, approvals
and permissions, and the satisfaction of all of the requirements
prescribed by law or regulation, necessary to the carrying out of the
transactions contemplated herein shall have been procured.
b. ADVERSE PROCEEDINGS, INJUNCTION, ETC. There
shall not be (i) any order, decree or injunction of any court or agency
of competent jurisdiction which enjoins or prohibits the Merger or any
of the other transactions described herein or any of the parties hereto
from consummating any such transaction, (ii) any pending or threatened
investigation of the Merger or any of such other transactions by the
U.S. Department of Justice, or any actual or threatened litigation
under federal antitrust laws relating to the Merger or any other such
transaction; or (iii) any suit, action or proceeding by any person
(including any governmental, administrative or regulatory agency),
pending or threatened before any court or governmental agency in
which it is sought to restrain or prohibit Triad, Bancshares or UCB
from consummating the Merger or carrying out any of the terms or
provisions of this Agreement, or (iv) any other suit, claim, action or
proceeding pending or threatened against Triad, Bancshares or UCB or any
of their officers or directors which shall reasonably be considered
by Triad, Bancshares or UCB to be materially burdensome in
relation to the proposed Merger or materially adverse in relation
to the financial condition of either such corporation, and which
has not been dismissed, terminated or resolved to the satisfaction
of all
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parties hereto within ninety (90) days of the institution or threat
thereof.
c. APPROVAL BY BOARDS OF DIRECTORS AND
SHAREHOLDERS. The Boards of Directors of Triad, Bancshares and UCB
shall have duly approved and adopted this Agreement by appropriate
resolutions, and the shareholders of Triad and UCB shall have duly
approved, ratified and confirmed this Agreement, all to the extent
required by and in accordance with the provisions of this Agreement,
applicable law, and applicable provisions of their respective
Articles of Incorporation and By-Laws.
d. FAIRNESS OPINION. Triad shall have received
from Carson Medlin a written opinion (the "Fairness Opinion"), dated as
of a date preceding the mailing of the Proxy Statement/Prospectus to
Triad's shareholders in connection with the Shareholder Meeting, to
the effect that the terms of the Merger are fair, from a financial point
of view, to Triad and its shareholders; and, Carson Medlin shall have
delivered a letter to Triad, dated as of a date within five days
preceding the Closing Date, to the effect that it remains its opinion
that the terms of the Merger are fair, from a financial point of view,
to Triad and its shareholders.
e. TAX OPINION. Bancshares and
Triad shall have received, in form and substance satisfactory to them,
an opinion of KPMG Peat Marwick LLP substantially to the effect that:
(i) for federal income tax purposes, consummation of the Merger will
constitute a "reorganization" as defined in (section mark) 368(a)(1)(A)
of the Code; (ii) that no taxable gain will be recognized by a
shareholder of Triad upon such shareholder's receipt of Bancshares Stock
in exchange for his or her Triad Stock; (iii) that the basis of the
Bancshares Stock received by the shareholder in the Merger will be the
same as his or her Triad Stock surrendered in exchange therefor; (iv)
that, if Triad Stock is a capital asset in the hands of the shareholder
at the Effective Time, then the holding period of the Bancshares Stock
received by the shareholder in the Merger will include the holding
period of Triad Stock surrendered in exchange therefor; and (v) a
shareholder who receives cash in lieu of a fractional share of
Bancshares Stock will recognize gain or loss equal to any difference
between the amount of cash received and the shareholder's basis in the
fractional share interest. In rendering its opinion, KPMG Peat
Marwick LLP may rely on representations contained in certificates of
officers of Bancshares, UCB and Triad.
f. NO TERMINATION OR ABANDONMENT. This
Agreement shall not have been terminated by any party hereto.
g. NASDAQ LISTING. Bancshares shall have
satisfied all requirements for the shares of Bancshares Stock to be
issued to the shareholders of Triad in connection with the Merger to be
listed on the Nasdaq National Market as of the Effective Time.
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7.02. ADDITIONAL CONDITIONS TO TRIAD'S OBLIGATIONS.
Notwithstanding any other provision of this Agreement to the contrary,
Triad's separate obligation to consummate the transactions described
herein shall be conditioned upon the satisfaction of each of the
following conditions precedent on or prior to the Closing Date.
a. MATERIAL ADVERSE CHANGE. There shall not have
been any material adverse change in the financial condition, results
of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations of Bancshares and its
consolidated subsidiaries considered as one enterprise, and there
shall not have occurred any event or development and there shall not
exist any condition or circumstance which, with the lapse of time or
otherwise, may or could cause, create or result in any such material
adverse change.
b. COMPLIANCE WITH LAWS. Bancshares and UCB
shall have complied in all material respects with all federal
and state laws and regulations applicable to the transactions
described herein and where the violation of or failure to comply with
any such law or regulation could or may have a material adverse
effect on the financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments,
properties or operations of Bancshares and its consolidated
subsidiaries considered as one enterprise.
c. BANCSHARES' AND UCB'S REPRESENTATIONS AND
WARRANTIES AND PERFORMANCE OF AGREEMENTS; OFFICERS' CERTIFICATE.
Unless waived in writing by Triad as provided in Paragraph 10.03.
below, each of the respective representations and warranties of
Bancshares and UCB contained in this Agreement shall have been true and
correct as of the date hereof and shall remain true and correct on and
as of the Effective Time with the same force and effect as though made
on and as of such date, except (i) for changes which are not, in
the aggregate, material and adverse to the financial condition,
results of operations, prospects, businesses, assets, loan
portfolio, investments, properties or operations of Bancshares and
its consolidated subsidiaries considered as one enterprise, and
(ii) as otherwise contemplated by this Agreement; and Bancshares
and UCB each shall have performed in all material respects all its
respective obligations, covenants and agreements hereunder to be
performed by it on or before the Closing Date.
Triad shall have received a certificate dated
as of the Closing Date and executed by Bancshares and UCB and
their respective Presidents and Chief Financial Officers to the
foregoing effect.
d. LEGAL OPINION OF BANCSHARES AND UCB COUNSEL.
Triad shall have received from Howard V. Hudson, Esq., General Counsel
of Bancshares and UCB, a written opinion dated as of the Closing Date
and substantially in the form of Schedule E attached hereto or
otherwise in form and substance reasonably satisfactory to Triad.
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e. OTHER DOCUMENTS AND INFORMATION FROM BANCSHARES
AND UCB. Bancshares and UCB shall have provided to Triad correct and
complete copies of their respective Bylaws, Articles of Incorporation
and board resolutions (all certified by their respective Secretaries),
together with certificates of the incumbency of their respective
officers and such other closing documents and information as may be
reasonably requested by Triad or its counsel.
f. ARTICLES OF MERGER; OTHER ACTIONS. Articles
of Merger in the form described in Paragraph 1.07. above shall have been
duly executed and delivered by UCB as provided in that Paragraph.
g. ACCEPTANCE BY TRIAD'S COUNSEL. The form and
substance of all legal matters described herein or related to the
transactions contemplated herein shall be reasonably acceptable to
Triad's legal counsel.
7.03. ADDITIONAL CONDITIONS TO BANCSHARES' AND UCB'S
OBLIGATIONS. Notwithstanding any other provision of this Agreement
to the contrary, Bancshares' and UCB's separate obligations to
consummate the transactions described herein shall be conditioned
upon the satisfaction of each of the following conditions precedent on
or prior to the Closing Date.
a. MATERIAL ADVERSE CHANGE. There shall not have
occurred any material adverse change in the financial condition,
results of operations, prospects, businesses, assets, loan
portfolio, investments, properties or operations of Triad and the
Subsidiary considered as one enterprise, and there shall not have
occurred any event or development and there shall not exist any
condition or circumstance which, with the lapse of time or otherwise,
may or could cause, create or result in any such material adverse
change.
b. COMPLIANCE WITH LAWS; ADVERSE PROCEEDINGS,
INJUNCTION, ETC. Triad shall have complied in all material respects
with all federal and state laws and regulations applicable to the
transactions described herein and where the violation of or failure to
comply with any such law or regulation could or may have a material
adverse effect on the financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties
or operations of Triad and the Subsidiary considered as one enterprise.
c. TRIAD'S REPRESENTATIONS AND WARRANTIES AND
PERFORMANCE OF AGREEMENTS; OFFICERS' CERTIFICATE. Unless waived in
writing by Bancshares or UCB as provided in Paragraph 10.03. below,
each of the representations and warranties of Triad contained in
this Agreement shall have been true and correct as of the date hereof
and shall remain true and correct on and as of the Effective Time
with the same force and effect as though made on and as of such date,
except (i) for changes which are not, in the aggregate,
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material and adverse to the financial condition, results of
operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations of Triad and the Subsidiary
considered as one enterprise, and (ii) as otherwise contemplated by
this Agreement; and Triad shall have performed in all material
respects all its obligations, covenants and agreements hereunder to be
performed by it on or before the Closing Date.
Bancshares and UCB shall have received a
certificate dated as of the Closing Date and executed by Triad and its
Chairman and Chief Financial Officer to the foregoing effect and as to
such other matters as may be reasonably requested by Bancshares and UCB.
d. EFFECTIVENESS OF REGISTRATION STATEMENT;
COMPLIANCE WITH SECURITIES AND OTHER "BLUE SKY" REQUIREMENTS. The
Registration Statement shall be effective under the 1933 Act and no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC. Bancshares shall have taken
all such other actions, if any, as it shall consider to be required by
applicable state securities laws (i) to cause the Bancshares Stock
to be issued upon consummation of the Merger, at the time of the
issuance thereof, to be duly qualified or registered (unless exempt)
under such laws, (ii) to cause all conditions to any exemptions from
qualification or registration under such laws to have been satisfied,
and (iii) to obtain any and all required approvals or consents with
respect to the issuance of such stock, and any such required approvals
or consents shall have been obtained and shall remain in effect.
e. AGREEMENTS FROM TRIAD AFFILIATES. Bancshares
shall have received the written Affiliates' Agreements in form and
content satisfactory to Bancshares and signed by all persons who are
deemed by Bancshares or its counsel to be Affiliates of Triad as
provided in Paragraph 4.01.a. above.
f. ACCOUNTING TREATMENT. (i) Bancshares shall have
received assurances from KPMG Peat Marwick LLP, in form and content
satisfactory to it, to the effect that the Merger will qualify
to be treated as a "pooling-of-interests" for accounting purposes;
(ii) if requested by Bancshares, Triad's independent public
accountants shall have delivered to Bancshares a letter in form and
content satisfactory to it to the effect that such accountants
are not aware of any facts or circumstances that might cause the
Merger not to qualify for such treatment; and (iii) it shall not
have come to the attention of management of Bancshares that any event
has occurred or that any condition or circumstance exists that makes it
likely that the Merger may not so qualify.
g. LEGAL OPINION OF TRIAD COUNSEL. Bancshares and
UCB shall have received from Triad's special counsel, Ward and
Smith, P.A. a written opinion, dated as of the Closing Date and
substantially in the form of Schedule F attached hereto or otherwise in
form and substance reasonably satisfactory to Bancshares and UCB. In
rendering such opinion, Ward and Smith,
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P.A. may rely upon or provide instead the opinion of local counsel
for Triad as to certain matters more appropriately opined on by local
counsel.
h. OTHER DOCUMENTS AND INFORMATION FROM TRIAD.
Triad shall have provided to Bancshares and UCB correct and complete
copies of Triad's Articles of Incorporation, Bylaws and board and
shareholder resolutions (all certified by Triad's Secretary), together
with certificates of the incumbency of Triad's officers and such other
closing documents and information as may be reasonably requested by
the Bancshares or UCB or its counsel.
i. CONSENTS TO ASSIGNMENT OF REAL PROPERTY LEASES.
Triad shall have obtained all required consents to the assignment to
UCB of its rights and obligations under the Real Property Leases,
under the terms, rates and conditions of such Real Property
Leases in effect as of the date of this Agreement, and such
consents shall be in such form and substance as shall be satisfactory
to Bancshares and UCB; and, each of Triad's lessors shall have
confirmed in writing that Triad is not in default under the terms and
conditions of the Real Property Lease between such lessor and Triad.
j. ACCEPTANCE BY BANCSHARES' AND UCB'S COUNSEL. The
form and substance of all legal matters described herein or related to
the transactions contemplated herein shall be reasonably acceptable
to Bancshares' and UCB's legal counsel.
k. CERTAIN MERGER EXPENSES. The aggregate of
amounts paid or payable by Triad for legal and accounting fees
(including amounts payable for the Fairness Opinion described in
Paragraph 7.01.d. above) shall not exceed $175,000.
ARTICLE VIII. TERMINATION; BREACH; REMEDIES
8.01. MUTUAL TERMINATION. At any
time prior to the Effective Time (and whether before or after approval
hereof by the shareholders of Triad), this Agreement may be terminated
by the mutual agreement of Bancshares, UCB and Triad. Upon any such
mutual termination, all obligations of Triad, Bancshares and UCB
hereunder shall terminate and each party shall pay costs and expenses as
provided in Paragraph 6.04. above.
8.02. UNILATERAL TERMINATION.
This Agreement may be terminated by either Bancshares, UCB or Triad
(whether before or after approval hereof by Triad's shareholders) upon
written notice to the other parties and under the circumstances
described below.
a. TERMINATION BY BANCSHARES OR UCB. This
Agreement may be terminated by Bancshares or UCB by action of its
respective Board of Directors or Executive Committee:
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(i) if Triad shall have violated
or failed to fully perform any of its obligations, covenants or
agreements contained in Article IV or Article VI herein in any material
respect;
(ii) if Bancshares or UCB
determines at any time that any of Triad's representations or
warranties contained in Article II or in any other certificate or
writing delivered pursuant to this Agreement shall have been false or
misleading in any material respect when made, or that there has
occurred any event or development or that there exists any condition
or circumstance which has caused or, with the lapse of time or
otherwise, may or could cause any such representations or warranties to
become false or misleading in any material respect;
(iii) if, notwithstanding
Bancshares' satisfaction of its obligations under Paragraphs 6.01.b.,
6.01.c. and 6.01.e. above, Triad's shareholders do not ratify and
approve this Agreement and approve the Merger at the Shareholder
Meeting, or if the Shareholder Meeting is not held on or before April
30, 1996;
(iv) under the circumstances
described in Paragraph 6.06. above;
(v) if any of the conditions of
the obligations of Bancshares or UCB (as set forth in Paragraph
7.01. or 7.03. above) shall not have been satisfied or effectively
waived in writing by Bancshares and UCB, or if the Merger shall
not have become effective, on or before July 31, 1996, unless such
date is extended as evidenced by the written mutual agreement of the
parties hereto; or,
(vi) if the 30-Day Average is
greater than $43.20 unless Bancshares or UCB has become a party to and
agreement in principle or a binding agreement that contemplates a
merger of Bancshares or UCB into or with any other entity (other
than with the other or with any affiliated corporation) and in
which Bancshares or UCB will not be the surviving corporation,
or a sale of substantially all of Bancshares' or UCB's assets to any
other such entity in which event Bancshares shall not be able to
terminate this Agreement on account of the 30-Day Average exceeding
$43.20.
However, before Bancshares or UCB may terminate this
Agreement for any of the reasons specified above in (i) or (ii) of this
Paragraph 8.02.a., it shall give written notice to Triad as provided
herein stating its intent to terminate and a description of the
specific breach, default, violation or other condition giving rise to
its right to so terminate, and, such termination by Bancshares or UCB
shall not become effective if, within thirty (30) days following the
giving of such notice, Triad shall cure such breach, default or
violation or satisfy such condition to the reasonable satisfaction
of Bancshares and UCB.
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b. TERMINATION BY TRIAD.
This Agreement may be terminated by Triad by action of its Board of
Directors:
(i) if Bancshares or UCB shall
have violated or failed to fully perform any of their respective
obligations, covenants or agreements contained in Article V or VI
herein in any material respect;
(ii) if Triad determines that any
of Bancshares' or UCB's respective representations and warranties
contained in Article III herein or in any other certificate or writing
delivered pursuant to this Agreement shall have been false or
misleading in any material respect when made, or that there has
occurred any event or development or that there exists any condition
or circumstance which has caused or, with the lapse of time or
otherwise, may or could cause any such representations or warranties
to become false or misleading in any material respect;
(iii) if, subject to Triad's
satisfaction of its obligations contained in Paragraphs 6.01.a.,
6.01.b., 6.01.d. and 6.01.e above, its shareholders do not ratify and
approve this Agreement and approve the Merger at the Shareholder
Meeting, or if the Shareholder Meeting is not held on or before April
30, 1996;
(iv) if any of the conditions of
the obligations of Triad (as set forth in Paragraph 7.01. or 7.02.
above) shall not have been satisfied or effectively waived in writing
by Triad, or if the Merger shall not have become effective, on or before
July 31, 1996, unless such date is extended as evidenced by the written
mutual agreement of the parties hereto; or,
(v) if the 30-Day Average is
less than $28.80.
However, before Triad may terminate this
Agreement for any of the reasons specified above in clause (i) or (ii)
of this Paragraph 8.02.b., it shall give written notice to Bancshares
and UCB as provided herein stating its intent to terminate and a
description of the specific breach, default, violation or other
condition giving rise to its right to so terminate, and, such
termination by Triad shall not become effective if, within thirty (30)
days following the giving of such notice, Bancshares or UCB shall
cure such breach, default or violation or satisfy such condition
the reasonable satisfaction of Triad.
c. EXTENSION OF EXPIRATION DATE.
Except as otherwise shall be agreed among the parties, in the event
Bancshares, UCB and Triad mutually shall agree to extend the July 31,
1996 expiration date described in Paragraphs 8.02.a.v and 8.02.b.iv
above, then, notwithstanding anything contained in this Agreement
to the contrary and to the extent permitted by applicable law and
regulations, during the period beginning August 1, 1996, and ending at
the Effective Time, in the event Bancshares declares and pays a
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quarterly dividend, the Exchange Rate will be increased to include
the cash dividend declared and paid by Bancshares multiplied by the
Exchange Rate.
8.03. BREACH; REMEDIES. Except as
otherwise provided below, (i) in the event of a breach by Triad of any
of its representations or warranties contained in Article II of this
Agreement, or in the event of its failure to perform or violation of
any of its obligations, agreements or covenants contained in Articles
IV or VI of this Agreement, then Bancshares' and UCB's sole right and
remedy shall be to terminate this Agreement prior to the Effective Time
as provided in Paragraph 8.02. above, or, in the case of a failure to
perform or violation of any obligations, agreements or covenants,
to seek specific performance thereof; and (ii) in the event of any
such termination of this Agreement by Bancshares or UCB, then Triad
shall be obligated to reimburse Bancshares and UCB for up to (but not
more than) $100,000 in expenses described in Paragraph 6.04. which
actually have been incurred by them.
Likewise, and except as otherwise provided below,
(i) in the event of a breach by Bancshares or UCB of any of its
representations or warranties contained in Article III of this
Agreement, or in the event of its failure to perform or violation
of any of its obligations, agreements or covenants contained in
Articles V or VI of this Agreement, then Triad's sole right and remedy
shall be to terminate this Agreement prior to the Effective Time as
provided in Paragraph 8.02. above, or, in the case of a failure to
perform or violation of any obligations, agreements or covenants,
to seek specific performance thereof; and (ii) in the event of any
such termination of this Agreement by Triad, then Bancshares and UCB
shall be obligated to reimburse Triad for up to (but not more than)
$175,000 in expenses described in Paragraph 6.04. which actually have
been incurred by Triad.
Except as provided in Paragraph 8.04.,
notwithstanding anything contained herein to the contrary, if any
party to this Agreement breaches this Agreement by wilfully or
intentionally failing to perform or violating any of its obligations,
agreements or covenants contained in Articles IV, V or VI of this
Agreement, such party shall be obligated to pay all expenses of the
other party(ies) described in Paragraph 6.04., together with
other damages recoverable at law or in equity.
8.04. TERMINATION FEE. If (A) this Agreement is
terminated because Bancshares or UCB has entered theretofore, or
terminates this Agreement in anticipation of entering, into a letter of
intent or an agreement with any individual or entity that provides for
such individual or entity to acquire Bancshares or UCB, merge with
Bancshares or UCB where Bancshares or UCB is not the surviving
entity, or purchase all or substantially all of the assets of
Bancshares or UCB, (B) prior to termination of this Agreement,
Bancshares or UCB engages in negotiations relating to any such
transaction and a letter of intent or agreement with respect thereto
is entered into within twelve (12) months following the
termination of this Agreement, or (C) Bancshares or UCB engages in a
Proposed Acquisition and the result of engaging in such Proposed
Acquisition is that any of the conditions set forth in Article VII
shall fail to be satisfied on or before July 31, 1996 or the Effective
Time shall otherwise not occur on or before July 31, 1996, then
Bancshares and UCB shall pay to Triad a termination fee of
$500,000 and reimburse Triad its expenses incurred as a result of this
Agreement. If (X) this Agreement is terminated because Triad has
entered theretofore, or terminates this Agreement in anticipation
of entering, into a letter of intent or an agreement with any
individual or entity that provides for such individual or entity to
acquire Triad, merge with or into Triad, or purchase all or
substantially all of the assets of Triad, or (Y) prior to the
termination of this Agreement, Triad engages in negotiations relating
to any such transaction and a letter of intent or agreement with
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respect thereto is entered into within twelve (12) months following the
termination of this Agreement, then Triad shall pay to Bancshares, or at
the election of Bancshares to UCB, a termination fee of $500,000 and
reimburse Bancshares and UCB their expenses incurred as a result of this
Agreement. Payments of the termination fee and expenses under
this Paragraph 8.04. shall not in any way affect Triad's or Bancshares'
rights to any other remedy or relief at law or in equity.
ARTICLE IX. INDEMNIFICATION
9.01. INDEMNIFICATION FOLLOWING TERMINATION OF
AGREEMENT. Triad, Bancshares and UCB each hereby agree that in event
this Agreement is terminated for any reason and the Merger is not
consummated, then they will indemnify each other as provided below.
a. BY TRIAD. Triad shall indemnify, hold harmless
and defend Bancshares and UCB from and against any and all claims,
demands, causes of action, suits, proceedings, losses, damages,
liabilities, obligations, costs and expenses of every kind and nature,
together with reasonable attorneys' fees and legal costs in connection
therewith, whether known or unknown, and whether now existing or
hereafter arising, which Bancshares or UCB may receive, suffer, pay or
incur:
(i) in connection with or which
arise out of or result from or are based upon (A) Triad's or the
Subsidiary's operations or business transactions or its relationship
with any of its employees, or (B) Triad's or the Subsidiary's failure
to comply with any statute or regulation of any federal, state or local
government or agency (or any political subdivision thereof) in
connection with the transactions described in this Agreement;
(ii) in connection with or which
arise out of or result from or are based upon any fact, condition or
circumstance that constitutes a breach by Triad of, or any
inaccuracy in, any of its representations or warranties under or in
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connection with this Agreement, or any failure of Triad to perform any
of it covenants, agreements or obligations under or in connection with
this Agreement;
(iii) in connection with or which
arise out of or result from or are based upon any information about
or provided by Triad which is included in the Proxy
Statement/Prospectus and which information causes the Proxy
Statement/Prospectus at the time of its mailing to Triad's
shareholders to contain any untrue statement of a material fact or to
omit any material fact required to be stated therein or necessary in
order to make the statements contained therein, in light of the
circumstances under which they were made, not false or misleading; and,
(iv) in connection with or which
arise out of or result from or are based upon the presence, use,
production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, reporting, testing, processing,
emission, discharge, release, threatened release, control or
clean-up on, from or relating to the Real Property by Triad or any other
person of any Hazardous Substances, or any action taken or any event
or condition occurring or existing with respect to the Real Property
which constitutes a violation of any Environmental Laws by Triad or the
Subsidiary or any other person.
b. BY BANCSHARES AND UCB.
UCB shall indemnify, hold harmless and defend Triad from and against any
and all claims, demands, causes of action, suits, proceedings, losses,
damages, liabilities, obligations, costs and expenses of every kind
and nature, together with reasonable attorneys' fees and legal
costs in connection therewith, whether known or unknown, and whether
now existing or hereafter arising, which Triad may receive, suffer, pay
or incur:
(i) in connection with or which
arise out of or result from or are based upon (A) Bancshares' or UCB's
operations or business transactions or their relationship with any
of their employees, or (B) Bancshares' or UCB's failure to comply
with any statute or regulation of any federal , state or local
government or agency (or any political subdivision thereof) in
connection with the transactions described in this Agreement;
(ii) in connection with or which
arise out of or result from or are based upon any fact, condition or
circumstance that constitutes a breach by Bancshares or UCB of
any of their respective representations or warranties under or in
connection with this Agreement, or any failure of Bancshares or UCB to
perform any of their respective covenants, agreements or obligations
under or in connection with this Agreement; and,
(iii) in connection with or which
arise out of or result from or are based upon any information about or
provided by them which is included in the Proxy Statement/Prospectus
and which information causes the Proxy Statement/Prospectus at the time
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of its mailing to Triad's shareholders to contain any untrue statement
of a material fact or to omit any material fact required to be
stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were
made, not false or misleading.
9.02. INDEMNIFICATION FOLLOWING EFFECTIVE TIME. Following the
Effective Time, UCB agrees that, to the extent they would have
had a right to indemnification from Triad or the Subsidiary, then
UCB will indemnify Triad's and the Subsidiary's former officers and
directors against liabilities arising from actions in their official
capacities as officers and directors of Triad or the Subsidiary.
9.03. PROCEDURE FOR CLAIMING INDEMNIFICATION.
Any party seeking to be indemnified hereunder promptly shall give
written notice and furnish adequate documentation to the other party
of any claims in respect of which indemnity is sought. The indemnifying
party, through its own counsel and at its own expense, shall defend
any such claim and shall have exclusive control over the investigation,
preparation, and defense of such claim and all negotiations relating to
its settlement or compromise. The obligations of either party to
indemnify the other hereunder apply only if the party seeking to be
indemnified cooperates with and assists the indemnifying party in
all reasonably necessary respects in the conduct of the suit.
ARTICLE X. MISCELLANEOUS PROVISIONS
10.01. "PREVIOUSLY DISCLOSED" INFORMATION.
"Previously Disclosed" shall mean, as to Triad or as to Bancshares and
UCB, the disclosure of information in a letter delivered by such party
to the other prior to the date of this Agreement and which specifically
refers to this Agreement and is arranged in paragraphs corresponding to
the Paragraphs, subparagraphs and items of this Agreement applicable
thereto, all of which documents are incorporated herein by
reference.
Information disclosed in either party's letter
described above shall be deemed to have been Previously Disclosed by
such party for the purpose of any given Paragraph, subparagraph or
item of this Agreement only to the extent that information is
expressly set forth in such party's letter described above and that, in
connection with such disclosure, a specific reference is made in the
letter to that Paragraph, subparagraph or item.
10.02. SURVIVAL OF REPRESENTATIONS, WARRANTIES,
INDEMNIFICATION AND OTHER AGREEMENTS.
a. REPRESENTATIONS, WARRANTIES AND OTHER
AGREEMENTS. None of the representations, warranties or agreements herein
shall survive the effectiveness of the Merger, and no party shall have
any right after the Effective Time to recover damages or any other
relief from any other party to this Agreement by reason of
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any breach of representation or warranty, any nonfulfillment or
nonperformance of any agreement contained herein, or otherwise;
provided, however, that the parties agreements contained in Paragraphs
6.07. and 6.08. and Articles VIII and IX above, and Bancshares'
representations and warranties contained in Paragraphs 3.02. and 3.12.
above, shall survive the effectiveness of the Merger.
b. INDEMNIFICATION. The
parties' indemnification agreements and obligations pursuant to
Paragraph 9.1. above shall become effective only in the event this
Agreement is terminated, and neither of the parties shall have any
obligations under that Paragraph in the event of or following
consummation of the Merger. UCB's indemnification agreements and
obligations pursuant to Paragraph 9.2. above shall become effective
only at the Effective Time, and UCB shall not have any obligation under
that Paragraph prior to the Effective Time or in the event of or
following termination of this Agreement.
10.03. WAIVER. Any term or condition of this Agreement may
be waived (except as to matters of regulatory approvals and approvals
required by law), either in whole or in part, at any time by the
party which is, and whose shareholders are, entitled to the benefits
thereof; provided, however, that any such waiver shall be effective
only upon a determination by the waiving party (through action of its
Board of Directors) that such waiver would not adversely affect the
interests of the waiving party or its shareholders; and, provided
further, that no waiver of any term or condition of this Agreement by
any party shall be effective unless such waiver is in writing and
signed by the waiving party, or be construed to be a waiver of any
succeeding breach of the same term or condition. No failure or delay of
any party to exercise any power, or to insist upon a strict compliance
by any other party of any obligation, and no custom or practice at
variance with any terms hereof, shall constitute a waiver of the right
of any party to demand a full and complete compliance with such terms.
10.04. AMENDMENT. This Agreement may be amended,
modified or supplemented at any time or from time to time prior to the
Effective Time, and either before or after its approval by the
shareholders of Triad, by an agreement in writing approved by a
majority of the Board of Directors of Bancshares, UCB and Triad
executed in the same manner as this Agreement; provided however,
that, except with the further approval of Triad's shareholders of that
change or as otherwise provided herein, following approval of this
Agreement by the shareholders of Triad no change may be made in the
number of shares of Bancshares Stock into which each share of
Triad Stock will be converted.
10.05. NOTICES. All notices and other
communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally or by courier, or mailed by
certified mail, postage prepaid, as follows:
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a. If to Triad, to:
Triad Bank
113 North Greene Street
Greensboro, North Carolina 27401
Attention: James E. Mims, Chairman
With copy to: Alexander M. Donaldson, Esq.
Ward and Smith, P.A.
Two Hannover Square, Suite 2400
Raleigh, NC 27601
b. If to either Bancshares or UCB, to:
United Carolina Bancshares Corporation
127 West Webster Street
Post Office Box 632
Whiteville, North Carolina 28472
Attention: David L. Thomas, Exec. Vice President
With copy to: Alfred E. Cleveland, Esq.
McCoy, Weaver, Wiggins,
Cleveland & Raper
202 Fairway Drive
Fayetteville, NC 28305
10.06. FURTHER ASSURANCE. Triad,
Bancshares and UCB each agree to furnish to the others such further
assurances with respect to the matters contemplated herein and their
respective agreements, covenants, representations and warranties
contained herein, including the opinion of legal counsel, as such
other parties may reasonably request.
10.07. HEADINGS AND CAPTIONS.
Headings and captions of the sections and paragraphs of this Agreement
have been inserted for convenience of reference only and do not
constitute a part hereof.
10.08. ENTIRE AGREEMENT. This Agreement (including all
schedules and exhibits attached hereto and all documents incorporated
herein by reference) contains the entire agreement of the parties with
respect to the transactions described herein and supersedes any and
all other oral or written agreement(s) heretofore made, and there are
no representations or inducements by or to, or and agreements between,
any of the parties hereto other than those contained herein in
writing.
10.09. SEVERABILITY OF PROVISIONS.
The invalidity or unenforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement or other provision
hereof shall in no way affect the validity or enforceability of any
other provision or part hereof.
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10.10. ASSIGNMENT. This Agreement may
not be assigned by any party hereto except with the prior written
consent of the other parties hereto.
10.11. COUNTERPARTS. Any number of
counterparts of this Agreement may be signed and delivered, each of
which shall be considered an original and which together shall
constitute one agreement.
10.12. GOVERNING LAW. This Agreement is
made in and shall be construed and enforced in accordance with the laws
of North Carolina.
10.13. INSPECTION. Any right of Bancshares, UCB or Triad
hereunder to investigate or inspect the assets, books, records, files
and other information of the other in no way shall establish any
presumption that Bancshares, UCB or Triad should have conducted any
investigation or that such right has been exercised by Bancshares,
UCB, Triad, their respective agents, representatives or others. Any
investigations or inspections that have been made by Bancshares, UCB or
Triad or their respective agents, representatives or others prior
to the Closing Date shall not be deemed in any way in derogation or
limitation of the covenants, representations and warranties made by
or on behalf of Bancshares, UCB or Triad in this Agreement.
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IN WITNESS WHEREOF, Triad, Bancshares and UCB each has
caused this Agreement to be executed in its name by its duly authorized
officers as of the date first above written.
UNITED CAROLINA BANK
By:
David L. Thomas
ATTEST: Executive Vice President
Secretary
UNITED CAROLINA BANCSHARES CORPORATION
By:
David L. Thomas
ATTEST: Executive Vice President
Secretary
TRIAD BANK
By:
James E. Mims
ATTEST: Chairman
Secretary
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SCHEDULE TO AGREEMENT AND PLAN OF
REORGANIZATION AND MERGER
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
<S> <C>
A Plan of Merger
B Form of Affiliate's Letter
C Form of Employment Agreement
with James E. Mims
D Form of Employment Agreement
with Carl I. Carlson, III
E Form of Legal Opinion of
Counsel for Bancshares and UCB
F Form of Legal Opinion of
Counsel for Triad
</TABLE>
Triad Bank agrees to furnish supplementally a copy of any omitted schedule upon
request.
<PAGE>
APPENDIX B
EXCERPT FROM NORTH CAROLINA BUSINESS CORPORATION ACT
ARTICLE 13.
Dissenters' Rights.
Part 1. Right to Dissent and Obtain Payment for Shares.
ss. 55-13-01. Definitions.
In this Article:
(1) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or
acquiring corporation by merger or share exchange of that
issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent
from corporate action under G.S. 55-13-02 and who exercises
that right when and in the manner required by G.S. 55-13-20
through 55-13-28.
(3) "Fair value", with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the
corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the
corporate action until the date of payment, at a rate that is
fair and equitable under all the circumstances, giving due
consideration to the rate currently paid by the corporation on
its principal bank loans, if any, but not less than the rate
provided in G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial
owner of shares to the extent of the rights granted by a
nominee certificate on file with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the
record shareholder.
(7) "Shareholder" means the record shareholder or the
beneficial shareholder.
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ss. 55-13-02. Right to dissent.
(a) In addition to any rights granted under Article 9, a shareholder is
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation
(other than a parent corporation in a merger under G.S.
55-11-04) is a party unless (i) approval by the shareholders
of that corporation is not required under G.S. 55-11-03(g) or
(ii) such shares are then redeemable by the corporation at a
price not greater than the cash to be received in exchange for
such shares;
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired, unless such shares are then redeemable by the
corporation at a price not greater than the cash to be
received in exchange for such shares;
(3) Consummation of a sale or exchange of all, or substantially
all, of the property of the corporation other than as
permitted by G.S. 55-12-01, including a sale in dissolution,
but not including a sale pursuant to court order or a sale
pursuant to a plan by which all or substantially all of the
net proceeds of the sale will be distributed in cash to the
shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially
and adversely affects rights in respect of a dissenter's
shares because it (i) alters or abolishes a preferential right
of the shares; (ii) creates, alters, or abolishes a right in
respect of redemption, including a provision respecting a
sinking fund for the redemption or repurchase, of the shares;
(iii) alters or abolishes a preemptive right of the holder of
the shares to acquire shares or other securities; (iv)
excludes or limits the right of the shares to vote on any
matter, or to cumulate votes; (v) reduces the number of shares
owned by the shareholder to a fraction of a share if the
fractional share so created is to be acquired for cash under
G.S. 55-6-04; or (vi) changes the corporation into a nonprofit
corporation or cooperative organization;
(5) Any corporate action taken pursuant to a shareholder vote to
the extent the articles of incorporation, bylaws, or a
resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain
payment for their shares.
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(b) A shareholder entitled to dissent and obtain payment for his shares
under this Article may not challenge the corporate action creating his
entitlement, including without limitation a merger solely or partly in exchange
for cash or other property, unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
ss. 55-13-03. Dissent by nominees and beneficial owners.
(a) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the
beneficial shareholder.
Part 2. Procedure for Exercise of Dissenters' Rights.
ss. 55-13-20. Notice of dissenters' rights.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this Article and be accompanied by a copy of this Article.
(b) If corporate action creating dissenters' rights under G.S. 55-13-02
is taken without a vote of shareholders, the corporation shall no later than 10
days thereafter notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the dissenters'
notice described in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this
section, such failure shall not invalidate any corporate action taken; but any
shareholder may recover from the corporation any damage which he suffered from
such failure in a civil action brought in his own name within three years after
the taking of the
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corporate action creating dissenters' rights under G.S. 55-13-02
unless he voted for such corporate action.
ss. 55-13-21. Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must
actually receive, before the vote is taken written notice of
his intent to demand payment for his shares if the proposed
action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection
(a) is not entitled to payment for his shares under this Article.
ss. 55-13-22. Dissenters' notice.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is authorized at a shareholders' meeting, the corporation shall mail by
registered or certified mail, return receipt requested, a written dissenters'
notice to all shareholders who satisfied the requirements of G.S. 55-13-21.
(b) The dissenters' notice must be sent no later than 10 days after the
corporate action was taken, and must:
(1) State where the payment demand must be sent and where and
when certificates for certificated shares must be
deposited;
(2) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the
payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60
days after the date the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
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ss. 55-13-23. Duty to demand payment.
(a) A shareholder sent a dissenters' notice described in G.S. 55-13-22
must demand payment and deposit his share certificates in accordance with the
terms of the notice.
(b) The shareholder who demands payment and deposits his share
certificates under subsection (a) retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his share under this Article.
ss. 55-13-24. Share restrictions.
(a) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the proposed
corporate action is taken or the restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
ss. 55-13-25. Offer of payment.
(a) As soon as the proposed corporate action is taken, or upon receipt
of a payment demand, the corporation shall offer to pay each dissenter who
complied with G.S. 55-13-23 the amount the corporation estimates to be the fair
value of his shares, plus interest accrued to the date of payment, and shall pay
this amount to each dissenter who agrees in writing to accept it in full
satisfaction of his demand.
(b) The offer of payment must be accompanied by:
(1) The corporation's most recent available balance sheet as of
the end of a fiscal year ending not more than 16 months before
the date of offer of payment, an income statement for that
year, a statement of cash flows for that year, and the latest
available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair
value of the shares;
(3) An explanation of how the interest was calculated;
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(4) A statement of the dissenter's right to demand payment
under G.S. 55-13-28; and
(5) A copy of this Article.
ss. 55-13-26. Failure to take action.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must sent a new
dissenters' notice under G.S. 55-13-22 and repeat the payment demand procedure.
ss. 55-13-28. Procedure if shareholder dissatisfied with
corporation's offer or failure to perform.
(a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate or reject the corporation's offer under G.S. 55-13-25
and demand payment of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under G.S.
55-13-25 is less than the fair value of his shares or that the
interest due is incorrectly calculated;
(2) The corporation fails to make payment to a dissenter who
accepts the corporation's offer under G.S. 55-13-25 within 30
days after the dissenter's acceptance; or
(3) The corporation, having failed to take the proposed action,
does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares within
60 days after the date set for demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing (i) under
subdivision (a)(1) within 30 days after the corporation offered payment for his
shares or (ii) under subdivisions (a)(2) and (a)(3) within 30 days after the
corporation has failed to perform timely. A dissenter who fails to notify the
corporation of his demand under subsection (a) within such 30-day period shall
be deemed to have withdrawn his dissent and demand for payment.
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Part 3. Judicial Appraisal of Shares.
ss. 55-13-30. Court action.
(a) If a demand for payment under G.S. 55-13-28 remains unsettled, the
dissenter may commence a proceeding within 60 days after the date of his payment
demand under G.S. 55-13-28 and petition the court to determine the fair value of
the shares and accrued interest. Upon service upon it of the petition filed with
the court, the corporation shall pay to the dissenter the amount offered by the
corporation under G.S. 55-13-25.
(a1) If the dissenter does not commence the proceeding within the
60-day period, the dissenter shall have an additional 30 days to either (i)
accept in writing the amount offered by the corporation under G.S. 55-13-25,
upon which the corporation shall pay such amount to the dissenter in full
satisfaction of his demand, or (ii) withdraw his demand for payment and resume
the status of a nondissenting shareholder. A dissenter who takes no action
within such 30-day period shall be deemed to have withdrawn his dissent and
demand for payment.
(b) Reserved for future codification purposes.
(c) The court shall have the discretion to make all dissenters (whether
or not residents of this State) whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties must be served
with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The parties are entitled to the same discovery
rights as parties in other civil proceedings. However, in a proceeding by a
dissenter in a public corporation, there is no right to a trial by jury.
(e) Each dissenter made a party to the proceeding is entitled to
judgment for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation.
ss. 55-13-31. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under G.S. 55-13-30
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers
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appointed by the court, and shall assess the costs as it finds
equitable.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all
dissenters if the court finds the corporation did not
substantially comply with the requirements of
G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in favor of
either or any other party, if the court finds that the party
against whom the fees and expenses are assessed acted
arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this Article.
(c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
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APPENDIX C
The Carson Medlin Company
Investment Bankers
November 28, 1995
Page 1
November 28, 1995
The Board of Directors
Triad Bank
113 North Greene Street
Greensboro, NC 27420
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, of the consideration to be received by the unaffiliated shareholders of
Triad Bank under the terms of a merger of Triad Bank with and into United
Carolina Bank, a wholly-owned subsidiary of United Carolina Bancshares
Corporation, pursuant to the terms of an Agreement and Plan of Reorganization
and Merger (collectively, the "Agreements") by and among Triad Bank, United
Carolina Bank and United Carolina Bancshares Corporation (the "Merger"). Upon
the effective date of the Merger, each of the approximately 1,818,623
outstanding shares of Triad Bank's common stock will be converted into the right
to receive .569444 shares of United Carolina Bancshares Corporation common stock
(subject to adjustment as provided in the Agreements). The foregoing summary of
the Merger is qualified in its entirety by reference to the Agreements.
The Carson Medlin Company ("Carson Medlin") is a National Association of
Securities Dealers, Inc. member investment banking firm which specializes in the
securities of United States financial institutions. As a part of our investment
banking activities, we are regularly engaged in the valuation of United States
financial institutions and transactions relating to their securities. We
regularly publish our research on independent community banks regarding their
financial and stock price performance. We are familiar with the commercial
banking industry in the Southeast and the major commercial banks operating in
the region. We have been retained by Triad Bank in a financial advisory capacity
to render our opinion hereunder, for which we will receive compensation.
In reaching our opinion, we have analyzed the respective financial positions,
both current and historical, of Triad Bank, United Carolina Bank and United
Carolina Bancshares Corporation. We have reviewed (i) the Agreements; (ii) the
Annual Reports to shareholders of Triad Bank, including the audited financial
statements, for the five years ended December 31, 1994; (iii) the reports to its
primary regulator (Call Reports) of Triad Bank for the five years ended December
31, 1994 and the nine months ended Septenber 30, 1995; (iv) the Annual and
Quarterly Reports on Forms 10-K and 10-Q of United Carolina Bancshares
Corporation for the five years ended
<PAGE>
December 31, 1994 and the nine months ended September 30, 1995; (v) a draft of
the joint Prospectus/Proxy Statement of United Carolina Bancshares Corporation
and Triad Bank dated November 21, 1995 for the special meeting of the
shareholders of Triad Bank to be held in order to approve the Merger, and
(vi) certain other financial and operating information with respect to the
business, operations and prospects of Triad Bank, United Carolina Bank and
United Carolina Bancshares Corporation.
Carson Medlin also (a) held discussions with members of the senior management of
Triad Bank, United Carolina Bank and United Carolina Bancshares Corporation
regarding the historical and current business operations, financial condition
and future prospects of their respective companies; (b) reviewed the historical
market prices and trading activity for the common stocks of Triad Bank and
United Carolina Bancshares Corporation and compared them with those of certain
publicly-traded companies which it deemed to be relevant; (c) compared the
results of operations of Triad Bank, United Carolina Bank and United Carolina
Bancshares Corporation with those of certain banking companies which it deemed
to be relevant; (d) compared the proposed financial terms of the Merger with the
financial terms, to the extent publicly available, of certain other recent
business combinations of commercial banking organizations; (e) analyzed the pro
forma financial impact of the Merger on United Carolina Bancshares Corporation;
and (f) conducted such other studies, analyses, inquiries and examinations as
Carson Medlin deemed appropriate.
We have relied upon and assumed without independent verification the accuracy
and completeness of all information provided to us. We have not performed or
considered any independent appraisal or evaluation of the assets of Triad Bank,
United Carolina Bank or United Carolina Bancshares Corporation. The opinion we
express herein is necessarily based upon market, economic and other relevant
considerations as they exist and can be evaluated as of the date of this letter.
Based upon the foregoing, it is our opinion that the consideration to be
received by the unaffiliated shareholders of Triad Bank pursuant to the Merger
is fair, from a financial point of view, to the unaffiliated shareholders of
Triad Bank.
Very truly yours,
THE CARSON MEDLIN COMPANY
(Signature of The Carson Medlin Company)
C-1
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
The North Carolina Business Corporation Act (the "NCBCA")
provides for indemnification by a corporation of its officers,
directors, employees and agents, and any person who is or was serving at
the corporation's request as a director, officer, employee or agent of
another entity or enterprise or as a trustee or administrator under an
employee benefit plan, against liability and expenses, including
reasonable attorney's fees, in any proceeding (including without
limitation a proceeding brought by or on behalf of the corporation
itself) arising out of their status as such or their activities in any
of the foregoing capacities.
Permissible Indemnification. Under the NCBCA, a corporation may,
but is not required to, indemnify or agree to indemnify any such
person against liability and expenses incurred in any such proceeding,
provided such person conducted himself or herself in good faith and
(i) in the case of conduct in his or her official corporate capacity,
reasonably believed that his or her conduct was in the corporation's
best interests, and (ii) in all other cases, reasonably believed that
his or her conduct was at least not opposed to the corporation's best
interests; and, in the case of a criminal proceeding, where he or she
had no reasonable cause to believe his or her conduct was unlawful.
However, a corporation may not indemnify such person either in
connection with a proceeding by or in the right of the corporation in
which such person was adjudged liable to the corporation, or in
connection with any other proceeding charging improper personal
benefit to such person (whether or not involving action in an official
capacity) in which such person was adjudged liable on the basis that
personal benefit was improperly received.
Mandatory Indemnification. Unless limited by the corporation's
charter, the NCBCA requires a corporation to indemnify a director or
officer of the corporation who is wholly successful, on the merits
or otherwise, in the defense of any proceeding to which such person
was a party because he or she is or was a director or officer of the
corporation against reasonable expenses incurred in connection with the
proceeding.
Advance for Expenses. Expenses incurred by a director, officer,
employee or agent of the corporation in defending a proceeding may
be paid by the corporation in advance of the final disposition of
the proceeding as authorized by the board of directors in the specific
case, or as authorized by the charter or bylaws or by any
applicable resolution or contract, upon receipt of an undertaking by
or on behalf of such person to repay amounts advanced unless it
ultimately is determined that such person is entitled to be indemnified
by the corporation against such expenses.
Court-Ordered Indemnification. Unless otherwise provided in the
corporation's charter, a director or officer of the corporation who is a
party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court, after giving any
notice the court deems necessary, may order indemnification if it
determines either (i) that the director or officer is entitled to
mandatory indemnification as described above, in which case the court
also will order the corporation to pay the reasonable expenses incurred
to obtain the court-ordered indemnification, or (ii) that the
director or officer is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or
not such person met the requisite standard of conduct or was
adjudged liable to the corporation in connection with a proceeding by
or in the right of the corporation or on the basis that personal benefit
was improperly received in connection with any other proceeding so
charging (but if adjudged so liable, indemnification is limited to
reasonable expenses incurred).
Voluntary Indemnification. In addition to and separate and apart from
"permissible" and "mandatory" indemnification described above, a corporation
may, by charter, bylaw, contract or resolution, "indemnify or agree to
indemnify any one or more of its officers, directors, employees and agents
against liability
II-1
<PAGE>
and expenses in any proceeding (including without limitation a
proceeding brought by or on behalf of the corporation itself) arising
out of their status as such or their activities in any of the
foregoing capacities. However, the corporation may not indemnify or
agree to indemnify a person against liability or expenses he may incur
on account of activities which were at the time taken known or
believed by such person to be clearly in conflict with the best
interests of the corporation. Any provision in a corporation's charter
or bylaws or in a contract or resolution may include provisions for
recovery from the corporation of reasonable costs, expenses and
attorneys' fees in connection with the enforcement of rights to
indemnification granted therein and may further include provisions
establishing reasonable procedures for determining and enforcing such
rights.
Parties Entitled to Indemnification. The NCBCA defines
"director" to include ex-directors and the estate or personal
representative of a director. Unless its charter provides otherwise, a
corporation may indemnify and advance expenses to an officer,
employee or agent of the corporation to the same extent as to a
director and also may indemnify and advance expenses to an officer,
employee or agent who is not a director to the extent, consistent
with public policy, as may be provided in its charter or bylaws, by
general or specific action of its board of directors, or by contract.
Indemnification by Registrant. Subject to such restrictions
as are provided by federal securities law, Registrant's Bylaws
provide for indemnification of its directors and officers to the
fullest extent permitted by law and require its Board of Directors to
take all actions necessary and appropriate to authorize such
indemnification. In addition, Registrant currently maintains
directors' and officers' liability insurance.
Item 21. Exhibits and Financial Statement Schedules.
The following exhibits and financial statement schedules are filed
as part of this Registration Statement.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Number
pursuant to
Item 601 of
Regulation S-K Description of Exhibit
<S> <C>
2 Agreement and Plan of Reorganization and Merger
by and among Triad Bank, United Carolina
Bancshares Corporation and United Carolina Bank
(included as and incorporated from Appendix A of
the Prospectus/Proxy Statement filed as part of
the Registration Statement)
5 Opinion and Consent of Howard V. Hudson, Esq., as
to legality of shares being registered*
8 Opinion of KPMG Peat Marwick LLP as to tax
matters*
10.1 Form of proposed Employment Agreement
between United Carolina Bank and James E. Mims*
10.2 Form of proposed Employment Agreement between
United Carolina Bank and Carl I. Carlson, III*
13.1 1994 Annual Report to Shareholders of Triad
Bank*
13.2 Triad Bank Quarterly Report on Form F-2 for
the Quarter Ended March 31, 1995*
13.3 Triad Bank Quarterly Report on Form F-2 for
the Quarter Ended June 30, 1995*
II - 2
<PAGE>
Exhibit Number
pursuant to
Item 601 of
Regulation S-K Description of Exhibit
13.4 Triad Bank Quarterly Report on Form F-2 for
the Quarter Ended September 30, 1995*
13.5 Triad Bank Current Report on Form F-3 dated
October 24, 1995*
23.1 Consent of Howard V. Hudson, Jr., Esq. (included
in Exhibit 5)
23.2 Consents of KPMG Peat Marwick LLP*
23.3 Consent of The Carson Medlin Company*
24 Power of Attorney*
99 Form of appointment of proxy to be used in
connection with the Special Meeting of
Shareholders of the Triad Bank
</TABLE>
___________
* Filed previously.
(b) Financial Statement Schedules.
All financial statement schedules are omitted as substantially all the
required information is contained in the Registrant's consolidated financial
statements which are incorporated herein by reference or is not applicable.
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the
prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and (iii) to include any material
information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement;
(2) that, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a)
or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities
II - 3
<PAGE>
offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction, the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of
such issue.
(d) The registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one
business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(e) The registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the
subject of and included in the registration statement when it
became effective.
II - 4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Whiteville, State of North Carolina, on December 21, 1995.
UNITED CAROLINA BANCSHARES CORPORATION
BY: /s/ E. Rhone Sasser
E. Rhone Sasser
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ E. Rhone Sasser Chairman of the Board, December 21, 1995
E. Rhone Sasser President and Chief Executive
Officer (principal executive
officer)
/s/ Ronald C. Monger Executive Vice President and December 21, 1995
Ronald C. Monger Chief Financial Officer
(principal financial officer)
/s/ John F. Watson Controller (principal December 21, 1995
John F. Watson accounting officer)
/s/ J. W. Adams Director December 21, 1995
J. W. Adams
/s/ John V. Andrews Director December 21, 1995
John V. Andrews
/s/ Russell M. Carter Director December 21, 1995
Russell M. Carter
/s/ W. E. Carter Director December 21, 1995
W. E. Carter
Director December 21, 1995
Alfred E. Cleveland
/s/ James L. Cresimore Director December 21, 1995
James L. Cresimore
II - 5
<PAGE>
Signature Title Date
/s/ Thomas P. Dillon Director December 21, 1995
Thomas P. Dillon
/s/ C. Frank Griffin Director December 21, 1995
C. Frank Griffin
/s/ James C. High Director December 21, 1995
James C. High
/s/ Jack E. Shaw Director December 21, 1995
Jack E. Shaw
/s/ Harold B. Wells Director December 21, 1995
Harold B. Wells
/s/ Charles M. Winston Director December 21, 1995
Charles M. Winston
*By Howard V. Hudson, Jr., Attorney in Fact pursuant to Power of Attorney
dated November 28, 1995
II - 6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number
pursuant to
Item 601 of
Regulation S-K Description of Exhibit
<S> <C>
2 Agreement and Plan of Reorganization and Merger by and
among Triad Bank, United Carolina Bancshares Corporation
and United Carolina Bank (included as and incorporated from
Appendix A of the Prospectus/Proxy Statement filed as part
of the Registration Statement)
5 Opinion and Consent of Howard V. Hudson, Jr., Esq., as to
legality of shares being registered*
8 Opinion of KPMG Peat Marwick LLP as to tax matters*
10.1 Form of proposed Employment Agreement between United
Carolina Bank and James E. Mims*
10.2 Form of proposed Employment Agreement between United
Carolina Bank and Carl I. Carlson, III*
13.1 1994 Annual Report to Shareholders of Triad Bank*
13.2 Triad Bank Quarterly Report on Form F-2 for the
Quarter Ended March 31, 1995*
13.3 Triad Bank Quarterly Report on Form F-2 for the
Quarter Ended June 30, 1995*
13.4 Triad Bank Quarterly Report on Form F-2 for the
Quarter Ended September 30, 1995*
13.5 Triad Bank Current Report on Form F-3 dated October 24, 1995*
23.1 Consent of Howard V. Hudson, Jr., Esq. (included in Exhibit
5)
23.2 Consents of KPMG Peat Marwick LLP*
23.3 Consent of The Carson Medlin Company*
24 Power of Attorney*
99 Form of appointment of proxy to be used in connection with
the Special Meeting of Shareholders of the Triad Bank
</TABLE>
____________
* Filed previously.
<PAGE>
Triad Bank
113 North Greene Street
Greensboro, North Carolina 27420
APPOINTMENT OF PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints James E. Mims and Kenneth M.
Greene (the "Proxies"), or either of them, as proxies, with full power
of substitution, to vote the shares of the common stock of Triad Bank
(the "Bank") held of record by the undersigned on January 2,
1996, at the Special Meeting of Shareholders of Triad (the "Special
Meeting") to be held at Holiday Inn Four Seasons, 3121 High Point Road
at I-40, Greensboro, North Carolina, at 10:00 a.m. on February 27, 1996,
and at any adjournments thereof. The undersigned hereby directs that
the shares represented by this appointment of proxy be voted as follows
on the proposals listed below:
1. PROPOSAL TO APPROVE AGREEMENT. Proposal to approve the Agreement
and Plan of Reorganization and Merger dated as of October 19, 1995
(the "Agreement"), between Triad, United Carolina Bancshares
Corporation ("Bancshares") and United Carolina Bank ("UCB"), and to
approve the transactions described in the Agreement, including,
without limitation, the merger of Triad into UCB with the result
that the outstanding shares of Triad's common stock, $2.50 par value
per share, will be converted into shares of Bancshares' common
stock, $4.00 par value per share.
( ) FOR ( ) AGAINST ( ) ABSTAIN
2. OTHER BUSINESS. On such other matters as properly may come
before the Special Meeting, the persons named herein as Proxies are
authorized to vote the shares represented by this appointment of
proxy in accordance with their best judgment.
PLEASE SIGN AND DATE THIS APPOINTMENT OF PROXY ON THE REVERSE SIDE
AND RETURN IT TO TRIAD IN THE ENCLOSED ENVELOPE. THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 1 ABOVE.
<PAGE>
THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY WILL BE VOTED
AS DIRECTED ABOVE. IN THE ABSENCE OF ANY DIRECTION, THE PROXIES WILL
VOTE THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY FOR PROPOSAL 1.
SHOULD OTHER MATTERS PROPERLY COME BEFORE THE SPECIAL MEETING, THE
PROXIES WILL BE AUTHORIZED TO VOTE THE SHARES REPRESENTED BY THIS
APPOINTMENT OF PROXY IN ACCORDANCE WITH THEIR BEST JUDGMENT. THIS
APPOINTMENT OF PROXY MAY BE REVOKED BY THE HOLDER OF THE SHARES TO WHICH
IT RELATES AT ANY TIME BEFORE IT IS EXERCISED BY FILING WITH THE
SECRETARY OF TRIAD A WRITTEN INSTRUMENT REVOKING IT OR A DULY EXECUTED
APPOINTMENT OF PROXY BEARING A LATER DATE OR BY ATTENDING THE SPECIAL
MEETING AND ANNOUNCING HIS OR HER INTENTION TO VOTE IN PERSON.
Dated: , 1996
Signature of Owner of Shares
Signature of Joint Owner of Shares (if any)
Instruction: Please sign above exactly as your name
appears on this appointment of proxy. Joint owners
of shares should both sign. Fiduciaries or other
persons signing in a representative capacity should
indicate the capacity in which they are signing.
IMPORTANT: TO INSURE THAT A QUORUM IS PRESENT AT THE SPECIAL MEETING,
PLEASE SEND IN YOUR APPOINTMENT OF PROXY WHETHER OR NOT YOU PLAN TO
ATTEND. EVEN IF YOU SEND IN YOUR APPOINTMENT OF PROXY, YOU WILL BE ABLE
TO VOTE IN PERSON AT THE SPECIAL MEETING IF YOU SO DESIRE.
